CIHM 

Microfiche 
Series 

(Monographs) 


ICIMH 

Collection  de 
microfiches 
(monographies) 


Canadian  Institute  for  Historical  Micror«productions  /  Institut  Canadian 


de  microreproductions  historiques 


%:mm.  :imj?fTm^is^msm&^i:!^s^^s^BBsmm 


Technical  and  Bibliographic  Notes  /  Notes  techniques  et  bibliographiques 


The  Institute  has  attempted  to  obtain  the  best  original 
copy  available  for  filming.  Features  of  this  copy  which 
may  be  bibliographically  unique,  which  may  alter  any  of 
the  images  in  the  reproduction,  or  which  may 
significantly  change  the  usual  method  of  filming  are 
checked  below. 


□ 


Coloured  covers  / 
Couverture  de  couleur 


I      I   Covers  damaged  / 

' — I   Couverture  endommag^e 

j      I    Covers  restored  and/or  laminated  / 
' — I   Couverture  restauree  et/ou  pelliculee 

I I   Cover  title  missing  /  Le  titre  de  cc  jverture  manque 

I I   Coloured  maps  /  Cartes  geographiques  en  couleur 

□    Coloured  ink  (i.e.  other  than  blue  or  black)  / 
Encre  de  couleur  (i.e.  autre  que  bleue  ou  noire) 

I      I    Coloured  plates  and/or  illustrations  / 


Planches  et/ou  illustrations  en  couleur 

Bound  with  other  material  / 
Relie  avec  d'autres  documents 


n 


D 


D 


Only  edition  available  / 
Seule  edition  disponible 

Tight  binding  may  cause  shadows  or  distortion  along 
interior  margin  /  La  reliure  serree  peut  causer  de 
I'ombre  ou  de  la  distorsion  le  long  de  la  marge 
interieure. 

Blank  leaves  added  during  restorations  may  appear 
within  the  text.  Whenever  possible,  these  have  been 
omitted  from  filming  /  Use  peut  que  certaines  pages 
blanches  ajoutees  lors  d'une  restauration 
apparaissent  dans  le  texte,  mais.  lorsque  cela  etait 
possible,  ces  pages  n'ont  pas  ete  filmees. 

Additional  comments  / 
Commentaires  supplementaires: 


L'Institut  a  microfilm^  le  meilleur  exemplaire  qu'il  lui  a 
6t6  possible  de  se  procurer.  Les  details  de  cet  exem- 
plaire qui  son!  peut-etre  uniques  du  point  de  vue  bibli- 
ographique,  qui  peuvent  modifier  une  image  reproduite, 
ou  qui  peuvent  exiger  une  modification  dans  la  m6tho- 
de  normale  de  filmage  sont  indiqu6s  ci-dessous. 

I I   Coloured  pages  /  Pages  de  couleur 

I I   Pages  damaged  /  Pages  endommag^es 

□   Pages  restored  and/or  laminated  / 
Pages  restaur^es  et/ou  pellicul6es 

0   Pages  discoloured,  stained  or  foxed  / 
Pages  d6color6es,  tachetees  ou  piquees 

I      I   Pages  detached  /  Pages  detachees 

[/ 1   Showthrough/ Transparence 

□   Quality  of  print  varies  / 
Quaii'f' 


D 


'■■':■•  de  I'impression 


InclLf '     :  p..„  m«;ntary  material  / 
Comp""',  ;  rill  m:.'eriel  supplementaire 


□ 


Pages  wucliy  or  partially  obscured  by  errata  slips, 
tissues,  etc.,  have  been  refilmed  to  ensure  the  best 
possible  image  /  Les  pages  totalement  ou 
partiellement  obscurcies  par  un  feuillet  d'errata,  une 
pelure,  etc.,  ont  et6  filmees  a  nouveau  de  fafon  a 
obtenir  la  meilleure  image  possible. 

Opposing  pages  with  varying  colouration  or 
discolourations  are  filmed  twice  to  ensure  the  best 
possible  image  /  Les  pages  s'opposant  ayant  des 
colorations  variables  ou  des  decolorations  sont 
filmees  deux  fois  afin  d'obtenir  la  meilleure  image 
possible. 


This  item  is  filmed  at  the  reduction  ratio  checked  below  / 
Ce  document  est  filme  au  taux  de  reduction  indique  ci-dess 


10x 


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16x 


18x 


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22x 


r 


26x 


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.-(•■'.'kfi^^.. 


a 


tT^^M   ^^-'JU.::.-^^    ^Rrffii'iM^' 


:'Sf: 


■^iiK?CT»W*:-^»r7-«iiaf^*^- 


Th0  copy  filmed  here  has  been  reproduced  thanks 
to  the  generosity  of: 

National  Library  of  Canada 


L'exemplaire  film*  fut  reproduit  grace  A  la 
Qtnirosixi  de: 

Bibliotheque  nationale  du  Canada 


The  images  appearing  here  are  the  best  quality 
possible  considering  the  condition  and  legibility 
of  the  originel  copy  end  in  keeping  with  the 
filming  contract  specifications. 


Original  copies  in  printed  paper  covers  are  filmed 
beginning  with  the  front  cover  and  ending  on 
the  last  page  with  a  printed  or  illustrated  impres- 
sion, or  the  back  cover  when  appropriate.  All 
other  original  copies  are  filmed  beginning  on  the 
first  page  with  a  printed  or  illustrated  impres- 
sion, and  ending  on  the  last  page  with  a  printed 
or  illustrated  impression. 


The  last  recorded  frame  on  each  microfiche 
shall  contain  the  symbol  — ^  (meaning  "CON- 
TINUED"), or  the  symbol  V  (meaning  "END"), 
whichever  applies. 

Maps,  plates,  charts,  etc.,  may  be  filmed  at 
different  reduction  ratios.  Those  too  large  to  be 
entirely  included  in  one  exposure  are  filmed 
beginning  in  the  upper  left  hand  corner,  left  to 
right  and  top  to  bottom,  as  many  frames  as 
required.  The  following  diagrams  illustrate  the 
method: 


Les  images  suivantes  ont  iti  reproduites  avec  le 
plus  grand  soin,  compte  tenu  de  la  condition  et 
de  la  nettet«  de  l'exemplaire  film*,  et  en 
conformity  avec  les  conditions  du  contrat  de 
filmage. 

Les  exemplaires  originaux  dont  la  couverture  en 
pepier  est  imprim«e  sont  film^s  en  commenpant 
par  le  premier  plat  et  en  terminant  soit  par  la 
derniAre  page  qui  comporte  une  empreinte 
d'impression  ou  d'illustration,  soit  par  le  second 
plat,  selon  le  cas.  Tous  les  autres  exemplaires 
originaux  sont  film*8  en  commen^ant  par  la 
premiere  page  qui  comporte  une  empreinte 
d'impression  ou  d'illustration  et  en  terminant  par 
la  derniAre  page  qui  comporte  une  telle 
empreinte. 

Un  des  symboles  suivants  apparaitra  sur  la 
derniire  image  de  cheque  microfiche,  selon  le 
cas:  le  symbole  -♦-  signifie  "A  SUIVRE"   le 
symbole  V  signifie  "FIN". 

Les  cartes,  planches,  tableaux,  etc.,  peuvent  etre 
filmis  i  des  taux  de  reduction  diff^rents. 
Lorsque  le  document  est  trop  grand  pour  etre 
reproduit  en  un  seul  clich*,  il  est  film*  A  partir 
de  I'angle  sup*rieur  gauche,  de  gauche  A  droite, 
et  de  haut  en  bas,  en  prenant  le  nombre 
d'images  n*cessaire.  Les  diagrammes  suivants 
illustrent  la  m*thode. 


1 

2 

3 

■„.a7:'".'SaS  XWIM^' 


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■r* ftv:  -A.^^?r»--!aii^si&:^j* w- 


MICIOCOPY   MSWUTION  T€ST   CHA«T 

ANSI  and  ISO  lESI  CHART  No    2 


;fl^  i^ 


^     APPLIED  1NA4GE     Inc 


■■6)    *82  -  0.100  -  P^on# 


4^rS 


Carnegie  Endowment  for  International  Peace 

DIVISION  OF  ECONOMICS  AND  HISTORY 
JOHN  BATES  CtARK.  DIRECTOR 


I'RELIMINARY  ECONOMIC  STUDIES  OF  THE  WAR 


eUlTED    BY 

DAVID  KINLEY 

ProfelKt  ol  Polllicil   EcODoniir,  UnWenllr  o(  llllnolt 
Mcmbtt  of  lommliier  ol  Rcuatck  ol  (be  Endowmcnl 


No.  5 


DIRECT  COSTS  OF  THE  PRESENT  WAR 


ERNEST  L.  BOG  ART 

Professor  of  Economics,  University  of  Illinois 


NEW  YORK 

OXFORD  UNIVERSITY  PRESS 

AMERICAN     BRANCH:     35    WEST    32nd    STREET 

London,  Toronto,  Melbourne  and  Bombay 

1918 


At:  I  til* 


fol. 
V  C 


toi'vmc;HT  i  ^ 

■  V    THE 

I'^KNkl.lK    tNDOWMtSr    KOR     INTIilNATIONAI.    PKACB 

J   JMK90N    I'lAtI    W.ttHING  lUN,   |>     C . 


Press  of  Byron  S.  Aiiams 
Washincton,  I).   C 


0  911458 


INTRODUCTORY  NOTli  BY  THL  DIRECTOR 

'1  he  Divisiim  nf  l".c<iiii>iiiics  and  History  of  the  Carnegie 
Knclowment  lor  Ii-.tcriiatiunal  I'eaie  is  or^janized  to  "promote 
a  tliorotiKli  and  scientific  investij,'atinii  of  the  causes  and  results 
of  war."  In  accordance  witli  this  purpose  a  conference  of  emi- 
nent statesmen.  piibHcists,  ami  economists  was  held  in  Berne, 
Switzerland,  in  August,  V)l\,  at  which  a  i>lan  of  investigation 
was  tonned  and  an  extensive  hst  of  tojncs  was  prepared.  An 
elaborate  series  of  inve^tigatii  ns  was  undertaken,  and.  if  the  war 
had  not  intervened,  the  result  inj,'  re|iorts  might  have  been  cx- 
l>ected.  iK-fore  the  prf.-cnt  date,  in  printed  form. 

Of  works  so  undertaken  sfniic  aim  to  reveal  direct  and  indi- 
rect conseipiences  of  warfare,  ;ind  thus  to  furnish  a  basis  for  a 
judgment  as  to  the  reasonableness  of  the  resort  to  it.  If  the 
evils  are  in  reality  larger  and  the  benefits  smaller  than  in  the 
conmion  view  they  appear  to  be.  such  studies  should  furnish 
convincing  evidence  of  this  fact  and  afford  a  basis  for  an  en- 
lightened i)olicy  whenever  there  is  danger  of  international  con- 
flicts. 

Studies  of  the  causes  of  warfare  reveal,  in  particular,  thtrse 
economic  infiuenccs  which  in  time  of  jieace  biing  about  clashing 
interests  and  mutual  suspicion  and  hostility.  They  show  \  lat 
I)olicies,  as  adopted  by  different  nations,  reduce  tli  confli  ,  of 
interest,  inure  to  the  common  benefit,  and  afford  a  basis  for 
internctional  confidence  and  good  will.  They  tend,  further,  to 
reveal  the  natural  economic  influences  whicn  of  themselves  bring 
al)out  more  and  more  hari.ionious  relations  and  tend  to  substi- 
tute genera!  benefits  for  the  mutual  injuries  th„t  follow  unin- 
telligent self-seeking.  Economic  internationalism  needs  to  be 
fortified  by  the  mutual  trust  that  just  dealing  creates;  but  just 
conduct  itself  may  be  favored  by  economic  conditions.  These, 
in  turn,  may  be  created  partly  by  a  natural  evolution  and  partly 


IS  IKCihl   (   |iik\     Mil 


I  III     JUKI  I  IllK 


l)>  tlie  lotiMimis  aition  of  Rovcriimcnls;  and  both  cvoluticm  and 
iniMii-  action  an-  aiii..iij,'  the  important  subjects  of  investigation. 

An  appeal  to  reri>()ii  is  in  order  when  excited  feelings  render 
armed  cuntlicts  imminent;  Init  it  is  «iiiite  as  surely  called  for 
wlun  no  excilcmint  exists  and  when  it  may  be  forestalled  and 
prevented  from  dcvelopinn  by  sound  national  i)olicies.  To  fur- 
nisli  a  scientific  basis  for  reasonable  international  policies  is  the 
purpose  of  some  of  the  studies  already  in  progress  and  of  more 
that  will  hereafter  be  undertaken. 

The  war  has  iiilcrriipted  work  on  rather  more  than  a  half  of 
the  studies  that  were  in  progress  when  it  began,  but  it  has  itself 
furni  'k..  topics  of  immediate  and  transcendent  importance, 
ihc  cost  direct  and  indirect,  of  the  conflict,  the  commercial 
policies  induced  by  it  and.  esjiecially.  the  direct  control,  which 
liccaiise  of  it,  governments  are  now  exercising  in  many  spheres 
of  economic  activity  where  formerly  competition  and  individual 
freedom  held  sway,  are  |)henomena  that  call,  before  almost  all 
others,  for  scientific  study.  It  is  cxfjected  that  most  of  the  in- 
terrupted work  will  ultimately  Iw  resumed  and  that,  in  the 
interim  before  this  occurs,  studies  r)f  even  greater  importance 
"ill  l>e  undertaken  and  will  !«  pushed  rapidly  toward  comple- 
tion. 

The  iniblicatinns  of  the  Division  of  F.conomic?  and  History 
are  under  the  direction  of  a  Committee  of  Research,  the  mem- 
bership of  which  includes  the  statesmen,  publicists,  and  econo- 
i.iists  who  participated  in  the  Conference  at  Rerne  in  1911,  and 
two  who  ha\c  s:nce  been  added.  The  list  of  membei^s  at 
present  is  as  follows: 

Fugene  Rorel.  Professor  of  Public  and  Inteniational  Law  in 
the  L'^niversity  of  Geneva. 

I-ujo  Rrentano.'  Professor  of  F.conomics  in  the  University  of 
Munich :  Member  of  the  Royal  Bavarian  Academy  of  Sciences. 

Charles  r;ide.  Professor  of  Comparative  Social  Fconomics  in 
the  L  nuersity  of  I'aris. 

'  M.ml,cr.,l,i,.  c.aM_,l  .April  f,,  1917.  l,y  n-as..,,  ,,f  tl,,-  .Udaralin,,  „f  .,  state 
of  war  between  the  Uii.te.l  States  and  the  Imperial  German  Government. 


iNTKonrcTnu'.   N.,rt  in    r,ih  niKKCTuR 


of  the  Treasury, 
le  University  of 


H.  li.  Grcven.  Professor  uf  Pohucal  Economy  and  Statistic;, 
in  the  University  uf  Leiden. 

Francis  W.  Hirst,  London. 

David  Kinley,  Professor  of  Political  Economy  in  the  Uni- 
versity of  Illinois. 

Henri  La  F(  naine.  Senator  of  Belgium. 

His   E.xcell     .y   Luigi   Luzzatti,   Professor  of   Constitutional 
Law  in  the        i.ersitv  of  Rome;  Secretarv 
18<>l-ls<F3:       Milt  Mini-ttr  ,  f  It.nly.  \'r 

Gotaro  Ogawa,   Professor  of   Pman.  t      , 
Kioto.  Japan. 

Sir  George  Paivli,  London. 

Mafifeo  Pantaleoni,  Professor  of  Political  Economy  in  the 
L'niversity  of  P.ome. 

Eugen  Philippovich  '.on  Philippsberg.'  Professor  of  Political 
Economy  in  the  L'ni-  ._,ity  of  \ienna;  Member  of  the  .\ustnan 
Herrenhaus.  Hofrat. 

Paul  S.  Reinsch,  United  States  Minister  to  China. 

Flis  i:.xcel!ency  liaron  \.  Sakatani.  formerly  Minister  ..f 
I'inance:  fi.rnierly  May*  r  <  t  Ti  kid. 

Theodor  Schiemann,-  Professor  of  the  History  of  Eastern 
Europe  in  the  University  of  Berlin. 

Harald  Westergaar  professor  of  Political  Science  and  Statis- 
tics in  the  I'niversitj       Copenhagen, 

Friedrich  J  i  ciherr  o.i  Wieser.^^  Professor  of  Political  Econ- 
omy in  the  !'•,■> t.sity  of  Vienna. 

^  The  funct:  ■'  of  members  of  this  Committee  is  to  select  col- 
l.-'vitors  cor,)  :tent  to  conduct  investigations  and  present  re- 
fK...  in  the  form  of  books  or  monographs;  to  consult  with  these 
writers  as  to  plans  of  study;  to  read  the  completed  manuscripts 
and  to  mform  the  officers  of  the  Endowment  whether  they  merit 
publication  in  its  series.     This  editorial  function  does  not  com- 

'  Died.  Jtiiif.  1917. 

-  .Memlarship  cvasi'.l  April  0.  1917,  l.>  rta-ion  of  the  dcclaratinn  of  a  .taf<. 
of  war  between  the  United  States  and  the  Imperial  German  Government 

•' MemlK-r-ihip  coased  Decctpbcr  7.  1917.  l.y  rea-on  of  the  declaration  of  a 
state  of  war  between  the  United  States  and  Austria-Hungary 


vi  INTKdlUCTdH'i     NCITK   IIV    TUF.  DUtlXTDK 

mit  the  nienibers  of  the  Loiiimittee  to  any  opinions  expressed  by 
the  w Titers.  Like  other  editors,  they  are  asked  to  vouch  for  the 
usefulness  of  the  works,  their  scientitic  and  hterary  merit,  and 
the  advisability  of  issuing  them.  In  Hke  manner  the  pubhca- 
tion  of  the  monographs  does  not  commit  the  Endowment  as  a 
body  or  any  of  its  officers  to  the  opinions  which  may  be  ex- 
Ijres^ed  in  them.  The  standing  and  attainments  of  the  writers 
selected  afiford  a  guarantee  of  thoroughness  of  research  and 
accuracy  in  the  statement  of  facts,  and  the  character  of  many  of 
the  works  will  be  such  that  facts,  .atistical,  historical,  and 
descriptive,  will  constitute  nearly  the  whole  of  their  content.  In 
so  far  as  the  opinions  of  the  writers  are  revealed,  they  are 
neither  approved  nor  condemned  by  the  fact  that  the  Endow- 
ment causes  them  to  be  published.  For  example,  the  publica- 
tion of  a  work  describing  the  attitude  of  various  socialistic 
bodies  on  the  subject  of  pence  and  war  implies  nothing  as  to  the 
views  of  the  ofilicers  of  the  Endowment  on  the  subject  of  social- 
ism ;  neither  will  the  issuing  of  a  work,  describing  the  attitude 
of  business  classes  toward  peace  and  war,  impl}  any  agreement 
or  disagreement  on  the  part  of  the  ollftcers  of  the  Endowment 
with  the  views  of  men  of  these  classes  as  to  a  protective  policy, 
the  control  of  monopoly,  or  the  regulation  of  banking  and  cur- 
rency. It  is  necessary  to  know  how  such  men  generally  think 
and  feel  on  the  great  issue  of  war.  and  it  is  one  of  the  purposes 
of  the  Endowment  to  promote  studies  which  will  accurately 
reveal  their  attitude.  Xeither  it  nor  its  Committee  of  Research 
vouches  for  more  than  that  the  works  issued  by  them  contain 
such  facts:  that  their  statements  concerning  them  may  generally 
he  tru«ted,  and  that  the  works  are,  in  a  scientific  way.  of  a  quality 
that  entitles  them  V>  a  reading. 

John  B.ates  Cl.'iRk, 

Director. 


^^i^K^m 


«■ 


■MP 


mf^^^m 


mm 


EDITOR'S  PREFACE 

Before  the  war  broke  out  financial  prophets  tc^ld  us  tliat  the 
economic  burden  entailed  by  it  would  be  so  great  as  to  make  its 
long  continuance  impossible.  But  thoughtful  students  of  his- 
torj-  were  well  aware  that  wars  once  entered  into  were  not  stopped 
because  of  their  tremendous  costs.  The  present  war  is  no  ex- 
ception, and  prolxibly  will  continue  imtil  one  side  or  the  other  is 
in  a  position  to  enforce  its  .  ;rms.  In  the  midst  of  the  terrible 
conflict  no  appeal  for  peace  can  successfully  be  made  on  the  basis 
of  destruction  of  wealth.  Nor  should  it  i>e  in  this  war,  at  any 
rate.  For  so  far  as  the  United  States  and  her  allies  are  concerned, 
the  other  issues  involved  far  outweigh  the  utmost  economic  de- 
struction that  can  Ik;  imagined  as  the  result  of  the  war. 

However,  the  matter  of  cost  is  of  great  interest  as  well  as  of 
importance  from  two  points  of  view.  Many  people  are  surprised 
that  the  countries  involved  have  been  able  to  incur  the  waste  of 
war  through  so  long  a  period.  The  surprise,  however,  exists 
because  of  a  common  misconception  concerning  the  source  of  a 
country's  economic  ability  to  iiear  war.  War  is  not  waged  with 
wealth  accumulated  in  gold  or  silver :  nor,  for  any  length  of  time, 
even  with  accumulated  munitions  of  war.  If  a  country's  agri- 
cultural and  industrial  forces  are  sufficient  to  supply  what  is 
necessan,-  to  feed  and  clothe  the  people,  including  the  army,  the 
country  may  continue  war  indefinitely  so  far  as  concerns  the 
"sinews  of  war."  The  important  thing  is  that  the  supply  of 
food,  clothing,  and  munitions  and  implements  of  war  shall  be 
continuous  and  adequate.  That  continuity  of  su[)ply  depends 
on  the  natural  resources  of  the  country  and  the  population  not 
included  in  the  fighting  line.  In  such  a  condition,  even  if  a 
country  could  not  buy  anything  abroad,  it  could  continue  in 
war.  Moreover,  it  could,  while  at  war,  buy  abroad  as  long  as 
its  supply  of  gold  lasted  and  its  credit  was  g(-Kxl.  i>rovided,  of 
course,  it  could  insure  that  tlie  goixls  bought  would  get  to  its 


Vlll  EIUTOR  S    PREFACE 

])urts.  If  n  country  at  war  is  not  able  to  get  goods  from  abroad 
and  if,  at  the  ^anlt•  time,  the  population  which  it  can  spare  fron; 
the  army  is  not  sufficient  to  sui)ply  continuously  from  its  own 
natural  resources  the  minimum  needs  of  the  civil  population 
and  the  army,  then  it  is  hound,  in  the  long  run,  to  become  eco- 
nomically weak  and  to  lose  the  war ;  but  the  period  through  which 
a  country  can  carry  on  a  war,  even  under  these  conditions,  is 
indefinite.  Therefore,  there  is  no  real  groiuul  for  suq>rise  at 
the  duration  of  the  present  struggle. 

However,  a  stiidy  of  the  costs  oi  the  war  is  interesting  and 
imp<jrtant  from  another  \iewpoint.  It  helps  us  more  easily  to 
determine  not  only  the  burden  we  are  creating  for  ourselves  and 
our  posterity,  but  it  assists  us  in  deciding  how  great  a  propor- 
tion of  our  expenditures,  may  well  come  from  taxation  rather 
than  loans.  Of  course,  there  is  a  limit  to  income  from  the  former 
siiurce  even  in  peace  time.  We  can  not  without  disaster  push  *tx- 
atioii  to  the  impairment  of  capital:  but  this  limit,  after  all,  is 
somewhat  elastic. 

'Ihc  e\];enditures  fi  r  the  war  -(3  far  are  staggering  to  the 
imagination.  By  the  end  of  last  December,  according  tv)  our 
.luthor's  figures,  the  direct  war  exiienditures  of  the  Entente  Al- 
lies were  about  S79,500,0(^).00(\  while  that  of  the  Central  Powers 
and  their  allies  was  about  S38.50O,tKX),O(X),  makmg  a  grand  total 
of  abont  SI  IS.OOO.OW.OOO  ti>  rejiresent  the  direct  exi)enditure  for 
this  awful  carnage.  .\s  the  author  well  remarks,  "after  all  de- 
ductions and  allowances  are  made  the  economic  cost  remains 
an  appalling  one."  lUit  unl)orn  generations  will  continue  to  pay 
the  costs  in  other  ways  than  money.  Human  vitality,  morality 
and  all  that  makes  ii.r  the  welfare  Iwth  of  the  individual  and 
society  ha\e  been  ^n  ih'sorganized  that  it  will  taki  'ong  time 
for  the  world  to  recover.  To  lie  sure  there  are  sonn.  compensa- 
tions. Just  what  these  are  and  how  they  may  l>e  valued  we  can 
not  clearly  tell  until  peace  comes.  Meanwhile,  while  we 'can  not 
now  stop  to  count  the  cost,  that  cost  should  l)e  one  of  the  wam- 
im;  !c-si  iir-  of  tlic  future. 

D.WID  KiNLEY, 

Editor. 


nvM 


CONTENTS 


PAGE 

United   Stales    2 

Enj,'land  6 

Canada    14 

Australia    13 

Xew  Zealand   16 

India    16 

France   17 

Russia    J3 

Italy    >7 

(nlier  Entente  Allies    oO 

Cierniany    31 

Austria-Hungary },7 

Teutonic  Allies    40 

Conclusion    41 


DIRECT  COSTS  OF  THE   PRESENT  WAR 


'lie  cost  of  a  war  is  measured  in  lite,  destruction  of  prop- 
erty, loss  of  economic  etiliciency  and  '^restige,  and  lowering  of 
normal  standards  of  consumption  al<  ig  many  lines.  It  is  im- 
possible to  appraise  such  varied  values  by  any  unit  of  meas- 
urement, and  some  of  them  are  clearly  not  reducible  to  monetary 
valuation.  In  the  following  pages  the'-pfore  only  the  direct  out- 
lays of  the  governments,  which  are  matters  of  usual  financial 
procedure,  are  taken  into  account.  These  events  are  still  so  re- 
cent, the  necessity  for  haste  so  urgent,  that  in  most  cases  the 
governments  themselves  have  not  as  yet  absolutely  correct  state- 
ments of  their  expenditures,  revenues  and  loans.  But  every 
effort  has  been  made  in  this  study  to  secure  official  and  accurate 
information.'  If  errors  have  been  made  it  has  probably  been 
through  the  omission  of  items  which  should  have  been  included. 
The  tables  err,  if  at  all.  therefore,  on  the  side  of  conservatism. 

For  convenience  in  checking  up  the  figures  in  the  following 
tables  with  the  original  sources,  the  poimd  sterling  has  been 
estimated  at  $5.00,  the  rouble  and  yen  at  50  cents,  the  mark  at 
2^  cents,  and  the  franc,  lira,  and  krone  at  20  cents. 


1  The  chief  soun"?  of  informati  iii  have  been  the  English  Finance  Accounts^ 
the  French  Joiirn-'  OMcwl,  the  I.ussian  Yearbook,  the  German  Statistische's 
JahrbucI ,  the  Report  of  the  Secretary  of  the  Treasury  of  the  United  States; 
the  budge*  speeches  of  the  various  ministers  of  finance ;  and  the  more  im- 
portant financial  journals,  sucii  as  The  Statist,  The  Economist,  the  Bankers' 
Magacin,-.  The  Commercial  and  Financial  Chronich  -^  hanz  Financ-Archiv, 
the  Rex'iie  de  Science  el  de  la  Legislation  finanriere: 


UNITED  STATES 


In  spite  of  its  late  entrance  into  the  world  war  the  exuendi- 
turc  >  of  the  United  States,  In-  reason  of  their  maijnitude,  ciready 
rival  those  of  the  leadin','  Eiiroiican  belligerents.  From  the  very 
day  of  its  entrance  into  the  struggle,  on  April  6,  1917,  the  ex- 
penditures have  shown  a  startlingly  rapid  growth.  These  may 
he  given  hv  months  as  follows,  excluding  advances  to  tlie  Allies, 
the  last  three  i)eace  months  Ijeing  given  also  by  way  of  com- 
parison. 

EXPFNIMTrRKS  OF   THK   L'NITI-n   ST.\TF.S 

1917  Monthly  Daily 

January       $79,910,714  $2,577,765 

tebruaVv           75,^^44,498  2,7ftS.406 

March    ■        72,773.903  2,347,545 

\nril     81,599.598  2,719.986 

Mav                                   114,102,810  3,680.7.% 

June                               134,304.040  4,776,801 

July     208.299,031  6,719,3i3 

"•XuKU'it          277,438,000  8,949,613 

Septeml.er  349,013,305  11. 337.7o« 

October    465,045.360  14,904.690 

November    512,952.0.15  17,098,401 

December    611.297,425  19,719,272 

Total $2,982,580,719  $97,540,306 

It  is  not  possible  at  tliis  time  to  tell  exactly  how  this  mone\- 
has  been  spent,  but  an  approximate  idea  may  be  secured  from 
a  statement  of  the  ex]ienditures  for  the  fiscal  years  ending  June 
30,  1017  and  1918.  This  is  given  in  the  following  table,  t.>- 
gether  with  the  figures  for  the  previous  year,  for  jnirposes  of 
comparison : 


s^E^^wcj'iHr^^^^cs^^^Sf 


-,:tfv\ 


••Ai  'A-r 


INITEn  STATES  3 

OBJECTS  OF  EXI'ENDITUKES' 

Purpo...  1915-16  1916-17  191/--1S' 

Civil   establishment    $380,911,373  $425,565,747  $1,W5.8«6,359 

Military  ostablishmont   132,185..'75  409.789,321  «.'^'>f.-"^f^ 

Naval  estat,lisl,nH-nt  155.029.426  257,  66.437  L'^' '178.036 

Kiv.r ,  and  harbors    32,450,301  30,487.3..^  f^i';^^ 

Pan.ima  Canal   17.503,728  l-M'-'-H."  rH-?;T 

Public  debt   22.910,313  24.742,129  '>-^i'i^, 

Miscellane.ius 1.016,310  34.028.110  344.120 

T„tal $74Zo06!726      $1,194,891,434      $12,725,340,849 

I'urchase  of  obligations  of  for-  

eign  governments   885.000.000        t3.35 1 ,400,000 

X,,tal $2,079,891,434      $10.i»76.740,849 

♦Appropriations.  t  Actual  for  period  July   l-Dcceiubcr  31,  1917. 

In  endeavoring  to  separate  the  ex]K'n(litures  attributable  to 
war,  no  serious  error  will  Ix;  made  if  the  exiJenditures  for  1915- 
16  be  regarded  as  nomial  and  the  difference  between  the  figures 
for  this  year  and  those  for  the  two  subsetiuent  years  he  regarded 
as  war  e.xpenditures.  This  would  give  war  expenditures  of 
$452,884, 70S  for  the  jieriod  April  6-June  3(>.  1917.  to  which 
nuist  l)e  added  the  atlvances  to  the  Allies  of  .S885.0(X).0OO,  giving 
a  total  of  81.337.884.708  for  the  first  three  tnoiuhs.  For  the 
ne.xt  six  months.  July  l-I)ecemlK;r  31.  1917,  half  of  the  appro-' 
priationF  lor  the  year  1917-18  less  the  corresiX)nding  amount 
for  191.5-16  gives  85.9^1 .667.062.  If  to  this  be  added  the  loans 
to  the  .\llies  during  this  jieriixl,  the  total  w  ar  exi>enditures  from 
July  1  to  Decemljer  31,  1917,  apiK-ar  to  be  $9,343,067,062. 

In  similar  fashion  the  war  revenues  may  be  estimated.  The 
following  table  gives  the  actual  receipts  for  1916  and  1917  and 
the  estimates  for  1918. 


1  Rr|iort  of  Secretary  of  the  Trca-ury. 


|)|l;l-.l   1    (iiSTS  n|-   Till     I'KKSI  N  !    W  AK 

kl  \  KMKS  Ml     ll'l'  rNlTlCl)  SIATI'S 


S..iir.c  I'Jl?  I" 

Cust,.m>     $.'13,185,845 

lntirn;il  rtviiiin- : 

Orilmarv    ><),5.48().4/4 

l-:.,n-r.;cmy    ,-44,.'7«..«_>J 

CorjHiriitHin    incumc   tax...  :<(i.'>')i.iy:<S 

liidixiiliial    MUMiiic   tax (i7,')4.?,.VJ5 

l'.xi.i>>    ])riplit«    tax ■••• 

Sail's  of   imMii-   laiul    1,887.662 

MiMcllaMM.ii-     5.'.01i,rJ'> 


1916-17  1917-18 


354,.W7,426 
<»5.W,554 
179.572,888 
180.108..f4l) 

"i, 892.89  J 
8<),952,(j,?2 


973.(11X1.1)00 

5.!5.(K)il,(XX> 

l,22(),(HIO,()'H> 

1,8<X),0(XJ 

265,IKII),IIIX) 


$779.788.0(,5     $1,118,174,126     ?3,88(.,8l)l).(X)() 
779.788,0(j5  77'»,7SK,(Kj5 


T..ial     

Loss  normal  icmmuu-s  

War   r.xnni.s    $r3W86.«)bl     U107,011.935 

I.artje  a>  were  the  a<l(liti<m-  1"  revenue  .-eciired  by  the  adili- 
tional  taxe>,  especially  tho.-e  impn-ed  by  the  war  revenue  act 
of  Ucti)lK.T  6,  Ml",  they  were  (juite  inailequate  to  the  new  de- 
mands uiH.u  the  Treasury.  .Mxait  _'0  per  cent  of  the  war  e>:- 
l)enditures  ti>  the  end  of  1"17  were  raised  by  taxation  and  alxiut 
80  per  cent  by  l^ians.  The  loan>  contracted  l)y  the  .irovernnient 
during  thi>  i;eriod  were  a>  1' allows: 

WAK  BORR()\ViN(;S  OF  UXITKD  ST.VTK.S 


A|)r;!  (y  June  M)    July   1   Die.  31 

. .  $1.4W),335,094  $-20,434,902 

.3.44'),972.I108 

..       918,3)5.000  691,172.000 

4,390,000  27,362.0(X1 

14,052.277 


Lliaraclir 
First  I.ilii-rtv  loan   3':'~;.  June,   l''17».. 
Sccoiwl   l.iliiTtv   loan.  4^;.  .\..v..  1917*. 
Ccrtilicito    of    indelitidni-ss    (net)... 

1    year   Treasury    notos 

W'yr  savings  .and  thrift  sta!'ips 

j^,,^l     $2.388,9.30,094         $4,702,993,1S7 

*Tlii-sf  amounts  represent  reeelpts  ,,|  the  Treasurer  of  the  rnitcd  States 
on  aoeount  of  principal  reeeived.  linaneial  Statement  of  the  United  States 
Goycrnmmt.   IVc.   .>1.   1''17. 

The  results  of  these  vari.iu-  tables  may  now  lie  combined  so  a^ 
to  oive  a  .-umniary  view  ni  the  operations  of  the  government 
during  the  nine  month-  .if  its  participation  in  the  war.  The  re- 
lation oi  expenditures,  revcnvie-.  and  loans  are  briefly  set  forth 
in  the  t'nllnwino  tabic : 


•f^ 


IMTKD  STATF.S 


WAU    K\1'KNIJ1TLK|-.S   AND   RECEIPTS 


Period 
April  fHluiU'  M).   l'>17 
July  l-licc,  31.  1917.  . 


Expcnditurts 

$l.,?27,47i.(H)0 

9,J4J,072.0<X) 


Revenue 

Receipts 

$.!.W..W).<X)0 

1,553,506.000 


I^ans 
<.'.,5«8,'>.W,OtKl 
4.70Z993,00l) 


$1,891,892,000       $7,0^1,923.000 


Total     $10,670,544,001) 

I'roMi  tlie  expenditures  here  priveii  the  advances  to  the  .\Uie> 
must  1)e  deducted  as  these  sums  appear  in  the  tables  of  Iwrrow- 
inRs  In-  fhosf  ;:r,,veniments.  Suhtractinp:  then  the  total  sum  of 
$-l-.23r.,4(X).(VH)  which  had  U-en  thus  loaned  down  to  DecemWr  31. 
1017,  there  is  left  as  the  net  war  expenditures  of  the  United 
States  during  this  period  the  sum  of  $6,434,000,000. 


Tf',gm-  --ira#?«K*-^*??^H|?e:sgH^BLV'"f  fCT.'^ 


ENGLAND 


War  l)et\vcen  i:nj,'land  and  C.frniany  was  declared  on  Aufjust 
4,  \9\4.  and  the  day  li.llowinj,'  Parliament  autliori/.cd  a  vote 
of  credit  \<>r  .S3(IO,aUlHH).  To  provide  the  sum  thus  author- 
ized the  Chancellor  of  the  l-;xche(|uer  proceeded  to  issue  Treas- 
ury hills  and  also  secured  advances  from  the  Uank  of  Knj;land 
for  a  total  amount  of  SK(Ht,OtH).()(iO.  These  provided  the  neces- 
sary funds  until  the  first  war  loan  was  made  in  November. 

This  loan,  for  S^l, 730.1 '(X».(H)0,  consisted  of  3' ..  l)er  cent  IkhuIs, 
maturing;  l>elueeu  1*'J3  au<l  l'L'8.  is>ued  at  <)5;  their  real  yield 
was  thus  alKiut  4  per  cent.  Subscriptions  up  to  the  end  of  the 
tlscal  year  i  March  31.  l'>15)  brou.t;ht  into  the  Treasury  the 
sum  of  S1.450,(X!(>,(ilHl  In  addition  to  this  popular  h)an  the 
Treasury  also  sold  ?>  i>er  cent  five  year  I'.xchcciuer  Ixmds  to 
the  amount  of  .'^:38.500,OOt1. 

In  line  with  a  time  honored  policy  Iuif;laud  ep.rly  resorted  to 
taxation  to  meet  at  least  part  of  the  war  exiienditurcs.  As  a 
resuU  of  old-as;e  pensions  and  other  social  le.i,nslation  on  1>ehalf 
of  the  worV  ;  classes  the  iniblic  ex]x'nditures  of  Enj,'land  had 
been  trniwin.i,'  rai)idly  during'  the  ]iast  ten  years,  and  with  them 
her  tax  revenues.  The  last  l)udj,'ct.  of  May  4,  1-'14.  had  pro- 
posed new  taxes  aniountiuij;  to  about  $r.7.505,(XX)  for  the  coming 
year,  and  these  were  iiuthorixed  in  July.  Hut  in  .\ovember.  1*^14, 
additional  taxation  was  imjxised  which  was  calculated  to  brin.;,' 
in  about  S66.8()0.(100  nicire  to  the  end  of  the  fiscal  year. 

r>ut  while  the  receipts  were  increased  by  over  $1.^0,0(10,000 
the  expenditures  had  been  growinsj  at  a  much  m()re  rapid  rate. 
For  the  iirst  ei<'ht  nn'mhs  i)f  the  war  they  were  as  follows: 


■-W.  .,"it 


'  listv  'i»*-3«>^'tiaimwi»xj3Sf  i« ' 


I  A  I. LAN  n  7 

WAR  EXPF.NDirUKHS   UV  ULAKTF.RS.  191+-15 ' 

Piriod  Nn  of  Days  Pir  Uuartcr  Per  Day 

\uu    4  Set    M)    1<M4  SS  $.(51. 135,000  ?S,"X?5.00(» 

n,     11).!     U     1M4  '^-'  9.iO.4mM10O  I'UIS.OOO 

Jan:  1  Nurch  •.!!  wis: : ::;:::::      ^      _}:^'^!*^     '■'■■^■^■'^ 

Ai.K.  4.  1914^  Mard,  .M.  1015 24il  $i.4<«,5.»5.000        $10,.?52,3»JO 

The  j,'r«winK  war  cxiHrnditurc  was  met  and  more  than  met  1)> 
resort  to  iHirrowini,',  and  the  year  ended  with  a  comfortable 
balance  in  the  Ireasiiry.  The  receipts  and  exiH-nditures  fi>r  tlie 
y,.;ir  1014-13.  indudiiiK  eight  months  of  war,  and  also  for  the 
last  complete  ikmcc  year  arc  shown  iir  the  foltowinjr  table: 

KKCKIPT^  AND  KXPI.NOITUKKS.  191.V-1915  2 

FiscaH'tar                              ICxiuiiilitiir-s  Rivtiuif  ktceiins        I.i>aii> 

101U1Q14  $987,4<i4.S4<)        $9<)1,214,485         

1914-1915     '                      2,8().'„<t.5.(K)()  1.13.M70,(>()0      $2,S27,««8.n5 

Anc    l."l'M4 -March   .n,    1915.  . ,  2.491.7W.9«iO  858,793.73)         2.827.888,115 

The  cl(i-c  of  the  fiscal  ycnr  1014-15  saw  (Ireat  Britain  well 
])rcp;irc(l  let  a>siiine  the  enormous  financial  burdens  which  it  was 
already  clear  she  would  lie  called  uiK>n  to  assume.  The  national 
debt  had  l)eeii  nearlv  doubled  as  a  result  of  eijiht  months  of  war. 
Init  this  was  to  increase  even  more  rajiidly  thereafter. 

HRITISH  DEHT.  MARCH  M.  1915  ^ 

Prew.-.r   .lelf    <XS.^K27l).5SO 

TrcaMirv  l.ills   (  mt  I S.^)8.2.iO,0()0 

3  per  cent  Fxcliifiuer  \hn\iU.  192(1        2.?8. .^10,000 

,V  ;  per  cent  war  N.an 1 ,480.000.(X)(> 

Miscellaneous  borrowings   802.1,W.ll.-' 

T-.tal  war  .lei,! 2.828.888.115 

T, .tal   <li-l It f ''>.%7. 1 58.6r,5 

♦Parli.im-ntary  Paper  Xo.  Cii.  7426. 

When  the  new  fiscal  year  .  i)ened  it  was  clear  that  the  w;ir 
was  not  to  end  as  speedily  as  had  been  at  first  optimistically 

I  Tlu-  Statist.  July  7.  1917.  p.  17. 

=  /"i)i.in.<-  .h-iouiils.  See  also  The  licoiwmisl  (L.'n.lon),  April  7.  1917.  p. 
618. 

'  7'/i.-  SiJtisi,  Oci.  6.  1917.  p.  557. 


kKQHE  11ir!rJKt.T   "  ""CTil 


tm'        '    Ult-^Jf  ..:,-! 


}(  DIKKtT   COSTS  "iK    III!     IKISKNT    WAR 

anticipate.!.  The  csptmlitiires  t..r  the  ooiiiiii),'  twelve  mmiths 
were  e^liiiKitol  at  S?.(.(.3.-'/"l>.(K)()  an.l  revenue  receipts  were 
expAte.l  to  >iel.l  al^mt  Sl,..51.<rf.(MKM).  lea\  in^  the  iKiiance  ol 
$4,311,Oll»,(Ht()  to  lie  met  by  loans.' 

The  iinmcliate  needs  of  the  Trea.urv  were  met  l.y  the  s;ile  ol 
sliort  term  securities.  Treasury  h\]U  were  i.sue.l  in  larj,'i.- 
amounts  at  comparatively  lou  rates  of  interest,  ami  l.y  June  _M 
the  amount  ..f  hills  (.iit>tan(lin«  was  $1.173.()0(),(XXt.  It  wa. 
felt  unwise  further  to  swell  the  tloiitinR  debt,  and  on  this  .iat.; 
the  second  war  loan  was  announced. 

This  loan  consisted  of  4'..  iit-r  cent  IkhkIs  redccmahle  in  n 
years  and  payable  in  30  years.  It  was  subject  to  taxation,  was 
unlimited  in  amount,  and  was  made  available  to  small  sub- 
scrilKrs  in  denominations  as  low  as  $_'5.  I'rom  this  loan  a  total 
of  S_','>(.l,7_'3.("MHt  was  received  by  the  Treasury  of  which  about 
half  represented  conversions  of  Consols  and  other  prewar  debt. 
The  proceeds  of  this  loan  sutticed  to  meet  the  exiwnditures  of 
the  next  three  or  four  months,  but  war  costs  were  mounting 
up  l>eyond  all  exjiectatioii  and  it  was  clear  that  a  more  vi!.;orous 
use  of  taxation  wou'd  ha\e  to  be  made.  The  progressive  in- 
crease of  the  war  exi)enditures  is  shown  in  the  followinj,'  table: 

W.\R  EXPENDITURES  BY  QU.\RTERS,  1915-16 

p.riod  \o.  ..Day-        Per  Quarter  Per  Day 

Jan:   lltrch   31.  mi. . .  . : ^  2.X7.20Sm  ^2M00O 

366  S7,7%,7<X).000  }2\..M<2.7()S 

.\ccordingly  in  September  drastic  increases  were  made  in  taxa- 
tion, cspecialb-  in  the  income  and  sui)er  taxes.  An  excess  pnTits 
ta.x  was  also  introduced  and  various  additions  made  to  indirect 
ta.ses.  These  proved  tr,  be  even  more  lucrative  than  had  Iven 
estimated  and  the  fiscal  year  closed  with  receipts  coiisideral.Iy 


1  Dfliatf^.  CumrtKjns.  Vdl.  71. 


,1.  KMW. 


1  \i,t,.\M)  9 

l:ir;,'iT  tlian  liad  Ik'i'II  anliii|-iitc<l.      !  lie  result  ui  tlic  ><ar\  imaii- 
fial  iipcratiotis  wa>*  as  follows: 

Kl  (  I  II'TS    W'D  KXl'INDITURES,  1915-16 

I'iscal  Year  KxiH-nilititr>  s  Revenue  Receipts  Loans 

l'M5  \(<  $7.7'*..7'«MX»i  «;i.(W.KM.l.'0  $5.8.'i. .;«»7.7H.S 

To  nu'it  these  ^Towini,'  demanils  the  (  haiici-llor  nt  tlu-  l'.\- 
i-he(|iter  \\a~  iCrced  to  make  use  of  even  credit  device  .ivailal)le. 
To  the  credit  of  I".n},dand  it  should  l>c  said,  however,  that  at  no 
time  has  any  siif,'j,'estion  l)cen  made  for  a  resort  to  paper  money. 
In  addition  to  the  10  30  year  loan  of  June  recourse  was  also 
had  to  short-tenn  llxcheiiuer  Ixinds,  to  loans  in  the  Inited  Siale> 
to  war  expenditure  and  war  savinj^'s  certificates,  and  at  .ill  ♦ 
to  Treasur>-  hills,  i'rom  all  of  these  sources  a  total  of  .,  .. 
$6.6JH,~.V=i.()(K)  was  secured,  from  which  nutst  Ik.-  suhtracted  ...^ 
repavment  of  the  advances  of  the  l!:nik  of  iMi^land.  'i'he  net 
l)<)rrowiti,!.'s  ;irt  shown  in  the  follow  injj  tahle : 

BRITISH  LO.XNS,  l'MS-16 

Trtasurv  bills   (net)    $.',444.(190,(1(10 

,5' ;  per 'cent  war  loan.  1925-28 •  1 78,990.(X10 

4'  ^.  per  c-nt  war  loan.  192.MS 2.961.725.900 

3  per  cent  Kxche^iiier  Imnds,  1920 tl29..M.\nOO 

5  p.r  cent  Kxcheqiier  bonds.  1920 7f*,445,(iOO 

Ways  and  Mean*      ivaiues   ( net ) i».4«0,('')0 

Other  debt    (n.  t)         45.000.fl00 

War   S.'vings   5-ve.ir  certificates r>,2.MMX)0 

5   per  cent   Anglo- French   loan 254.100.000 

Total    $f).628.7.^5.90() 

Lcs>   misccllanroiH   repayments 802,l.W.ll3 

Net    l„ans    $5,820,597,785 

•  ThrouKh  conversions  :  $,VU,870.000  in  issue.  t  Net  amount  relired. 

T-ar-^e  as  were  these  sums  the  needs  of  the  next  fiscal  yea.  •■■'•ere 
iar.srer  still.  The  interest  and  sinking  fund  chars:es  for  the  new 
debt  alone  now  amounted  to  $3.^.=; .0(10,000.  Ever>-  effort  was 
made  to  cut  dow  n  civil  expenditures.  The  road  improvement  fund 
was  ^'-andoned  and  appreciable  savings  made  in  other  cor    .'ii .: .' ' 


10  DiKKir  iiiSTs  or  the  i-kksknt  war 

limd  services.  I'-ul  tlie  remorselessly  jjrowini^  costs  of  the  war 
<|uickly  \vii>ed  out  these  economies  and  constituted  a  demand  for 
ever  jireater  sums.  I'.y  the  end  of  the  year  the  daily  costs  were 
over  S33.(XH_).UOO.  Their  steady  growth  is  indicated  in  the  follow- 
ing table: 

\\  \K  i-.\im:ni)Itlki:s  n\  gi'.xK'rr.RS.  i'>u.-i7 

IVrind  Xo.otnavs       Per  Quarter  Per  Day 

V      1    1    T„„     ;ii    lou,  91  $i.222,SO<),()t)()  $.>4,42.=i.O()0 

5!:;;:  jTMrr^h'.i'wir: :::::::::   ^       j!:!!^'!^      JJ^^ 

5,,5  st(),<M).565.(l«H)  $.?().!  11, l.i7 

Of  these  exixMiditurcs  lo.nis  contrihuted  7S.1  per  cent,  uhile 
taxes  alone  made  up  only  1  S.(.  per  cent.  It  was  felt  that  this  con- 
stituted too  wide  a  departure  frMui  the  ideal  of  the  XapnleoUK' 
and  Crimean  wars  xxhen  47  per  cent  .>i  the  cost  <<i  the  war  had 
been  nut  out  of  taxation.  Accordingly  a  determined  effort  wa> 
made  .luring  the  h>cal  ye.ir  Vm  17  t.-  increase  ^till  further  the 
revenue  from  laxe-.  Tlie  ma.nie  tax  was  raisc.l  to  3s.  in  the 
IH.und  or  _'?  i.er  cent  on  incomes  between  S(..v'  rmd  .SUlfKX).  '1  he 
rate  of  the  cxce»  prniiis  tax  was  raided  from  5(1  to  UO  per  cent. 
l-:xi>ting  rate-  of  custom-  and  excise  duties  were  doubled  and 
fpiadnipled  and  many  new  indirect  taxes  were  intr^Khucd.  I'rom 
all  these  source-  it  wa-  liored  to  -ecure  al>out  S1,_V.-.(^'(U'^X1  new 
tax  revenue,  or  a  lot.il  for  the  year  of  ab.mt  S2,8?0.0«)(),(HH>.  The 
actual  receii^t-  and  expenditure-  for  the  year  were  as  follows: 

IkHI  l-II'TS    \\l)  FXI'KNDIIfKF.S.  191i.-17 

T"i-c-il  Ve.T  I'.xptiicliniros  Kiveiuie  Rocoipls  Loans 

1910-17  $l(».Wi.5(o,5.^>  $.'.S<,7,1,^7,910  $8,114,0<o.niH) 

l-.ven  with  thi-  -tupendons  iucrea-e  in  the  burden  of  taxation, 
whicli  the  I-'.ngli-h  ])eo])le  :iccei)ted  without  nnu-muriug,  it  was 
necc-ary  to  rely  ni.ainly  upon  loan-  to  rai-e  the  $1 1  ,()lXt.(HM),- 
000  which  the  war  cost  h'.ngland  this  year.  .Xhoiit  one-third  oi 
the  adilitional  tax  revenue^  was  needed  to  meet  the  incre.i-ed 
intere-t  charge-  on  the  debt,  -o  that  not  much  .issistance  could 


KMILANP  " 

be  looked  for  from  this  source  to  meet  the  direct  costs  of  the  war. 
Short  term  Kxchetiiier  bonds  to  a  total  amoimt  0.'  over  $l./oO,- 
000.000  were  sold  lx>aring  5  and  6  iHjr  cent  interest.  Two  loans 
were  tloated  in  the  United  States  and  one  in  Japan.  War  savmgs 
and  war  expenditure  certificates  were  utilized  to  secure  the  sav- 
ings oi  small  investors,  and  finally  in  January.  1917.  a  tlnrd 
war  loan  was  lloated. 

This  loan  consisted  of  5  ikt  cent  bonds,  redeemable  192')-1  W 
and  issued  at  '15.  and  4  per  cent  bonds  redeemable  1929-1')42 
issued  at  par.  but  exempt  from  taxation.  Subscriptions  amounted 
to  '^.S.OOl.SC^.JSO.'  but  only  S3.')01, 883.000  was  covered  into 
the  Treasury  before  the  end  of  the  fiscal  year.  Wuh  the  pro- 
ceeds of  this'  loan  it  was  possible  to  retire  the  outstandini,'  Treas- 
ury bills  as  well  as  to  provide  fresh  funds  for  war  purposes. 
Tlie  net  borrowings  of  the  year  are  shown  in  the   following 

tal)!e : 

HKITISII   LOANS,  1916-17 

Trcasurvl„lN    *?^V^5.«» 

4  a,ul  5  per  cent  war  loan,  192>M7 •^•?,'  •^^{J^ 

5  per  cent    K.xchequer  bon.ls,    1921 ^It-S 

5  per  cent   Hxche,|,.er  l.on.ls.  1920 j?y,?=-^> 

5   per  cent   l-.xche.|uer  honds.   1919 L'Hn'^ 

(,  per  cent   Exchequer  bond>,   1920 '^^'LS 

1),,.,    Japanese    issue Q^'   S 

Wavs  and  Means  advances   ( net) 7??  j?n mo 

Other   debt    (net) U7--iw« 

War  Savings  5  year  certificates ,  ,^-7t:  ™Ji 

War  Expend.ture  2  year  cert.hcates lw,7w,'^ 

5- .  per  cent  collateral  loan  ,n  U.  S '^-S^* 

?. :.  per  cent  cllateral  loan  in  U.  S 250,000,000 

Total     $8,1.^5,940.000 

Less    ni'isceilancous    rep.iyments 21.865,000 

Net    Kans $>i.l  14,075.000 

»  Net  amount  retired. 

The  cost  of  the  war  during  the  entire  fiscal  year  ending  March 
31.  1^'18,  can  not  of  course  be  given  at  this  time,  but  a  fairly 
accurate  statement  may  l)e  made  of  actual  costs  up  to  the  end  of 
the  calendar  vear  1917.      The  progressive  increase  in  war  ex- 


lOnly  ?110,000.000  were  subscribed  for  in  the  tax  free  bonds. 


12 


UIUIX  T    (dSTS  (IF  TIIF.    I'KlvSK.ST    WAR 


peiKliliires  lias  been  maintained,  as  the   followinc;  fijrures  indi- 
cate: 

WAR   I'.XPEXnmRKS   r,Y   QUARTERS,   1917-18 


Pcriud 

April   1-hiiio  30.   1<»17 

Julv   1-Scpt.   MX    1917 

Oct.   1  Dec.  31,   1917 

Xu.  of  D.iys 

91 

92 

92 

Per  Qii.irter 

$3,356,435,000 

3,28.1,830,1  ;00 

3,505,')05,000 

Per  Day 

$36,885,000 

35,695,000 

38,105,000 

275  $10.14t).170.()00  $.V),895,164 

In  spite  III"  tho  i;ni\\inj^  costs  imly  sli.i^ht  additions  to  exist- 
inR  tax  revenues  were  propused,  hardly  en(ni,e;h  indeed  to  care 
for  the  increased  interest  charges.  The  biidsjet  estimates  for  the 
vear's  exper  i'tiires  were  siiqjassed,  while  ihe  revenues  diil  not 
meet  expectations,  so  that  ,t,'reater  resort  had  to  he  made  t  > 
borrowiiit;  than  had  I)een  anticipated.  'l"he  followinij  table 
.shows  the  actual  transactions  for  the  first  nine  months  of  the 
fiscal  \ear:' 

RF.CIU'TS  AXn  EXPF.XDITl'RKS,  .\PRIL  l-OEC.  31,  1917 
Period  Expcndittircs        Revenue  Receipts  Loans 


$2.003.25O.(K)O 


$8,938,510,000 


April  1-1  )ec.  31,  1917       S10,146,170,(XX) 

Duriui.;    this    jieriod    the   main    sources    of    borrowinf^s    were 

Treasnrv    liill-i.  "dther"  debt,  the  balance  of  the  third  war  loan, 

and  war  sa\  inys  certificates.     The  loans  from  tlie  I'liited  States 

f^nvernment    are    included    under    "other"    debt.      These   credit 

ransactiotis  may  be  stated  as  follows: 

WAR  ilORROWlXGS.  APRIL  l-DKC.  31.  1917 

Trrastirv   hills    $5,290,()(X),00O 

4  and  5  per  cent  loan  .if  1917  •   1,089,520,000 

5  per  cent  ICxchecpier  lionds 410.5.50.000 

War    -.ivinus   c.riiticatis  f   l.S(l.(XK),0(H) 

Loan    from   f.   S.  i.'overnment 2,O45.0(KMK)0 

Ad\  ances  of  li.ank  of  En«land  t   ,SO,000,(X)O 


T..lal 

Less  miscellaneous  repayments  t 


S';.()65.()7('.00O 
125,000.000 


Xet  loans  $8.940.070.(X)( > 

*  The  5  per  cent  issue  has  lieen  raised  by  conversion  to  over  $10.0(X),0(K).000, 
and  the  4  per  crnt  issue  to  over  $250,(XX),000. 

t  I'.stimatc  on  hasis  uf  Treasury  statement  of  Sept.  .W  and  weekly  returns 
since. 


1  77i.-   liiioi^'iiiist    (L.md.inl.   Dec.  8,   1917,   p.  9n<);    The  Chronich-.    Ian.   5, 
1918,  p.  5. 


ENGLAND 


13 


Summing  up  thf  fitiancial  operations  of  the  three  and  a  half 
vears  of  war.  from  August  1.  1914.  to  December  31.  191/  we 
find  that  Kn^land's  national  debt  has  grown  from  $3,o38._/U.- 
550  to  $28,390,000,000,  or  an  increase  of  $24,856,725,000.  But 
from  this  sum  mav  be  deducted  the  advances  made  by  Great 
Britain  to  the  Allies  and  Dominions,  including  a  gift  from 
India.  While  they  may  not  all  l)e  recoverable  they  should  be 
treated  as  investments  in  estimating  the  cost  of  the  war.  These 
amounted  on  Septeml)er  30,  1917.  to  $6,630,000,000.'  An  allow- 
ance for  the  next  three  months  would  bring  this  item  up  to  about 
$7.041. 00<X000  bv  t!ie  end  of  the  year.  Subtracting  this  sum  from 
the  debt  created 'during  the  war  there  is  left  a  net  debt  created 
by  England  for  war  purposes  of  about  $17,815,000,000. 

These  expenditures  include,  however,  the  ordinar>-  outlays  for 
the  armv  and  navv  since  .\pril  1.  1915.  which  in  peace  times 
amounted  to  about  $400,000,000  annually.  This  item  may  be 
calculated  at  SI.  100.000,000  for  the  period  from  April  1.  1915. 
to  December  31.  1917.  If  this  is  subtracted  the  net  cost  of  the 
war  is  reduced  still  further  to  al)out  $16.71 5.000.000. 

T. .  this  sum  must  now  l)e  added  the  amounts  collected  by  addi- 
tional war  taxation  during  this  period,  which  has  amounted  to 
not  less  than  .'^3.750,000.000.  This  gives  the  net  cost  to  Great 
Britain  of  three  years  and  five  months  of  war  as  $20,465,000.- 
000.  or  sav  in  round  numbers,  $21,000,000,000. 


1  Speech  nf  \.  B  Law,  chancellor  of  the  Exchequer,  on  Oct.  30.    Chronicle, 
Nov.  3.  1917,  p.  1748. 


CANADA 


Canada  lias  defrayed  most  of  tlie  war  expenditures  I)y  means 
of  loans,  so  that  these  measure  fairly  accurately  the  costs  of 
the  war  to  her.     'Ihe  fojlowini^  table  shows  these  loans: 

WAR  BORROWINGS  OF  CANADA.  AUG.  1,  lOl^-Dr.C.  .31.  1917 

Internal  Loans : 

5';;.  15  vear,  Nov..  1915 $100,000,0(K) 

S%  10  VI  ar,  Sept..  1916 100,000,000 

5';  20  year,  -March,  1917 150.000.000 

Loans  in  V.   S. : 

5'";   1  and  2  voar  notes.  .AiiR.,  1915 -  ,'i00,000 

S'v   5-15  vear  bo.uls,  April.  1916 / ,  i!X),000 

5^;   2  year  n<.tc».  Aii;!..  1917 lOd.ilOO.OOO 

4'/.'~r   10  year  bonds  in  b mdon 2;.,()()0.000 

Advances  by   British  government 200,000,000 

Provincial  and  municipal  loans  125,000,000 

War    savings    certificates    10.000,000 

5%  3  year  debenture  stock  10,000,000 

"^otal    $940,000,000 


AUSTRALIA 


The  actual  costs  of  the  military  and  naval  operations  on  the 
part  of  Australia  have  been  met  by  means  of  borrowings.  Addi- 
tional taxes  have  been  collected,  but  the>e  have  been  absorbed 
by  the  growing  civil  expenditures  and  the  charges  on  the  war 
debt.     War  ex[)enditures  are  .shown  in  tlie  following  table: 

W.\R  EXPENDITURES  OF  AUSTR.M.IA 

Fiscal  Year 

July  1-1  une  30  Expenditures 

1914-15    $75,000,000 

1915-16  -'25,0CO,000 

1910-17  3.50,000,000 

1917-18  (6  mos.)    200,000,000 

Total    $850,000,000 

To  meet  these  exi)enditures  the  Commonwealth  government 
has  issued  inconvertible  pai)er  money  to  an  amount  of  probably 
not  less  than  3150,000,000.  But  the  main  reliance  has  been 
placed  upon  domestic  loans.  These  ojierations  are  .shown  in  the 
following  table: 

WAR  BORROWINGS  Ol"  AUSTRALIA,  AUG.  1,  1914-DF.C.  31,  :917 

Inti  riial  Loan.'; 

45;%,  192.5,  Aug.,   IP'S $66,947,000 

4'/%,   1925,    Feb.,    1916 107,909,000 

4J^7r,  1925,   Au?.,   1916 102,847,000 

V'.'T;   1925,    Feb.,   1917 100,000.000 

4J/%.   1927,   Nov.,  1917 90,001,000 

.\dvances  by   British  government 238,800,000 

$706,503,000 
Inconvcrtibk    paper   money    150,000,000 

Total $856,503,000 


NEW  ZEAI  AND 


The  costs  of  the  war  to  Xew  Zealand  have  1>een  about  $50,- 
000,000,  which  have  been  met  out  of  iucn..i>ed  taxation.  Xo 
loans  SL'fiu  to  have  been  iilaced  by  ihi-  country. 


INDIA 


Tart  of  the  co.sts  of  the  war  to  India  have  lx;en  borne  by  the 
British  government  and  do  not  appear  in  the  Indian  tinanci.il 
statements.  The  f(jllowing  few  loans  have  been  made  directly 
by  India: 

W.AR  LO.WS  OF  INDI.\ 

4  per  cent  internal  loan $1.^,000,000 

5  per  tent  loan  in  Lomlon,   \pnl.  1917 500,000,000 

Treasury  bills  in  London 20,000.000 

$535,000,000 


FRANCE 

The  financial  situation  in  France  was  very  unsatisfactory  at 
the  outbreak  of  the  war.  A  deficit  had  been  announced  for  the 
year  1914  and  a  loan  was  authorized  on  July  7  for  $161,000,- 
000  m  5'A  per  cent  20  year  bonds.  By  the  beginning  of  Auf,'ust 
$76,000,000  had  been  paid  in.  but  the  outbreak  of  the  war  made 
the  further  payments  difficult,  while  the  existence  of  this  unful- 
filled loan  embarrassed  the  Treason,'  in  its  subsequent  operations. 
Although  it  had  been  thirty-seven  times  ovcrsubscril)ed,  only 
$119,947,200  had  l^een  paid  in  by  the  end  of  the  year. 

In  order  to  meet  the  deficit  in  *''e  budget,  estimated  at  $251,- 
600,000  for  1914,  an  income  tax  ..ad  also  been  voted,  but  this 
was  not  to  become  operative  until  January  1,  191?.  The  inva- 
sion of  France  and  the  seizure  of  the  richest  industrial  section 
of  the  northern  ixirt  of  the  country,  the  withdrawal  of  men  of 
productive  age  for  militar>-  service,  and  the  interniption  of  the 
normal  economic  activities  of  the  people  made  it  necessary  to 
postpone  the  introduction  of  the  income  tax  for  still  another 
year,  and  made  the  resort  to  other  taxation  to  meet  the  costs  of 
the  war  inadvisable. 

As  both  loans  and  taxes  seemed  impossible,  resort  was  had 
at  the  beginning  to  the  financial  assistance  of  the  Bank  of  France. 
This  institution  stands  in  very  close  relations  with  the  govern- 
ment, and  in  return  for  the  renewal  of  its  charter  in  18''"  for 
twenty-three  years  is  under  obligation  to  lend  to  the  govern- 
ment in  time  of  war  at  the  nominal  interest  rate  of  one  per  cent.' 
In  lOil  these  compulson,-  advances  had  been  fixed  at  $.'^80,- 
000,(XK),  but  in  September,  1914,  they  were  increased  to  $1,200,- 
000,000,  and  in  May,  1915,  to  $1,800,000,000.     During  the  first 


1  This  rate  will  be  niscd  to  3  per  cent  nne  year  after  the  end  of  the  war. 
Journal  dcs  Economistrs,  Oct.,  1914,  p.  64. 


IS  Ii|Kr.(  T   COSTS  HI-  Till     I'kKSI.NT  WAK 

five  motulis  lit"  tlic  war,  friiiii  Aiij^iisl  1  to  I )ecLMiil)er  .il,  l*'l  i, 
the  actual  advances  of  the  I'.ank  of  I'rance  to  the  };overiimeiit 
amounted  to  $7S5,(XX),OH».  These  advances  constituted  alx)ut 
two-thirds  of  all  tlie  iiio.'.cv  Imrrowed. 

Ill  addition  to  the  returns  from  tlie  .V  .■  per  cent  loan  and  ad- 
vances fri'in  the  I'.ank  of  {•'ranee,  an  appeal  was  also  made  di- 
rect to  the  small  investors  hy  the  offer  of  sliort  term  Treasury 
hills,  known  as  /'"(!.s-  </.•  hi  ilrffiist-  natioiialc.  These  l)ore  4  i)er 
cent  when  issued  for  three  months  and  3  ])er  cent  when  issued  for 
six  nuniths  o'  one  year.  I'.y  the  end  of  Decenil)cr  about  $k?3'*,- 
4()(l.i  ()0  of  these-  had  hecn  sold. 

The  credit  oix-rations  of  the  last  five  months  of  the  year  l'>14 
may  he  summarised  as  follows: 

KI.CF.IPTS  KY  IU)KK(nVINT..  .\L'G.  l-DIX.  31,  l')14 

(  iirri-pondont^   nf   tlu'   TrcMsurv $80,704,(100 

Ordin.-irv   Trcasiirv   billi; 2,^,8J4.000 

«,i<;.,-  df  ,'<!  d,-fi-nsc   lailfiuiW 3,W,4.=i7,000 

,1' ,  p.-r  cent  Imn   4.1047,000 

Acivamcs  liy  l!a-iks  "t  I  raiioi-  and  .if  AlKoria 785,000,000 

Total    $1,272,932,000 

Of  this  sum  .^3(1401,000  were  advances  to  forci.t;n  ij;overn- 
mi^iits. 

The  openintf  of  the  year  l')l.s  saw  little  chanse  in  the  xise  of 
credit  hv  I'rance  in  meeting,'  the  costs  of  the  war.  .\s  the  yield 
of  tlie  existing  taxes  had  fallen  off  38.'>  per  cent  below  normal 
and  new  t.ixes  were  im])ossible,  the  loan  policy  was  continued. 
Further  advances  by  the  Bank  of  France  brou,i:jht  these  up  X^ 
.$l,0()O,0(Xt,C)OO  hy  the  end  of  the  year.  Floating;  debt  to  the 
amount  of  about  SI, 300,0(^1,000  was  created,  consisting  for  the 
most  ])art  <if  the  hons  dc  la  defense  nationalc.  Ten  year  5  per 
cent  1)oik1s  ( ohlif/alimts  de  hi  defense  natiomile)  were  issued  in 
l''ebru.ir\  :  by  the  end  of  the  year  about  $76O,(X)O,000  had  been 
issued,  most  of  which  were  conversions  of  existing  bonds.  In 
October  the  .Xtiglo-I'icnch  loan  was  placed  in  the  I'nitcd  States, 
netting  tlie  government  altogether  about  $24O,(X)O,(X)0,  of  which 
$80,020,000  were  paid  in  during  the  year  1915.     All  these  sums 


KKAMK  19 

proved  iiiMitticicnt,  howcvc-r.  ;iii(l  in  N'nveiiil)er  the  first  national 
loan  was  issued. 

Tins  loan  consisted  of  5  per  cent  perjietiial  rcnlcs.  issued  at 
88.  The  yield  was  52/48/)(10,(»0.  of  which  Sl._'73.()(X3,(:)Oi> 
was  cash  and  the  reinainiler  was  Treasury'  hills  and  converted 
bonds.  .\l)out  $2.2(X).tKK>.(HX)  was  paid  in  hetore  the  end  of  the 
fiscal  year.  These  transactions  iiia\  he  suiiunarized  in  the 
follow  ing  table : 

RECEIPTS  BY  IM^RKOWING.  J.W.  1-DEC.  31,  1915  ' 

Treasury   bills    Sl.JM.OOD.OlX) 

National   dcfi-nse  uliliyations U6,4<X).00O 

.Angl.    I'rench  loan  in  l".  .S 8().0()0,0(K> 

Natior   .1  war  loan,  Nov..   1015 2,19.!.400.0()0 

-Adva-    es  by  Bank  of  |-rani-e .'3<).niK).(H)0 

MisceiianeoMs    46,8<)l),000 

Total    $3,971,200,000 

During  the  year  l'U6  the  same  loan  policy  was  continued,  the 
main  reliance  being  placed  upon  short  term  Treasury  bills,  ad- 
vances from  the  Bank  of  France,  etc.  Hut  in  November,  1916,  a 
second  permanent  loan  was  necessary  to  take  care  of  this  mass  of 
floating  debt.  This  also  consisted  of  a  perpetual  rentt:  at  5  [ler 
cent  and  was  issued  at  88.7.^.  The  total  subscriptions  amounted 
to  S2,275,000,000. 

It  w  as  becoming  apparent,  how  ever,  that  additional  .sums  must 
be  raised  by  taxation.  By  the  end  of  the  year  1916  the  interest  on 
the  new  war  debt  alone  amounted  to  $510,220,000.  Existing 
tn.xes.  which  were  still  slightlv  l>elow  nonnal,  were  quite  insuffi- 
cient to  meet  the  ordinary  civil  budget  and  in  addition  this  new 
charge.  Accordingly  an  income  tax  and  an  excess  war  profits  ta^c 
we.-e  imposed  which  went  into  effect  during  the  year  1^16.  .\nd 
by  an  act  passed  on  December  30,  1916,  a  number  of  additional 
taxes  were  imposed  and  the  rates  of  old  ones  raised.  It  was 
hoped  that  additional  tax  revenues  would  be  secured  from  these 
sources  for  the  vear  1917  of  alxjut  $263,800,000.     The  most 


1  ^t'l'iit'  dc  Scicnci-  ,'t  dc  I.edislnlion  /iiianciercs   (.\pril-June,  1916),  XIV, 
2.270. 


20 


DIKIl  1    l(iSI>.  Ill     rlll:    WKKSINT   WAK 


tli<.roi,j,'li-}-oing  retorni  ii.  the  Ircnd;  tax  system  was  imro<liKtcl 
l,v  ilie  act  of  July  31,  1"17.  which,  however,  was  not  to  ro  into 
elTcot  until  January  1,  I'^IH. 

In  spite  of  the  substantial  increase  in  the  tax  revenues  resultni- 
from  these  various  acts,  the  additional  receipts  for  1916  were 
barelv  sulVicient  to  meet  the  additional  interest  charges  of  the 
rapid'lv  Mxeliintr  <lel.t.  At  the  end  of  l')16  the  interest  charges 
on  this  new  debt  alune  amnunte.l  to  S5(L',3_'K,(KK).  Durmg^this 
year  the  net  l)orrowings  of  the  uovemment  amounted  to  $4,5.-^5,- 

'8a\CX)0. 

The  year  Vnj.  like  the  two  previous  ones,  saw  France  stdl 
financing  the  war  on  credit,  primarily  by  the  use  of  short  time 
securities.  Such  a  course  made  inevitable  the  emission  of  a  thir.l 
bond  issue  which  should  take  up  a  part  at  least  of  this  iloatin- 
debt.  Accordingly  in  November,  1917,  a  third  pennanent  1  >an 
was  made.  This  time  it  consisted  of  a  4  per  cent  ])eri)ctual  rrntc, 
issued  at  68.60.  The  total  subscriptions  amounted  to  S2,031,- 
200,(X)0. 

The  total  cost  of  the  war  to  France  may  now  be  briefly  sum- 
marized. The  total  credits  voted  from  Aug-ist  1,  1914.  to  De- 
cetnber  31,  1917,  for  both  civil  and  military  purposes  amount  to 
$20,600,000,000. 

The  actual  expendiuires    for  the  same  period  have  been  as 

follows : 

EXPF-NOT  ^UKF.S  1\  IRANCE.  .WG.  1,  19H-I)EC.  31.  1917 
(In  millions  of  dollars) 


Period 


\iiB.   1   Dec.  .M.  \9U 

T.in.    l-Occ.   .^1.  l"*!.^ 

"Tan.   l-Hec.   .^1  Wir. 

jan   l.-Dcc.   .M.  191" 


Strictly 

Militnrv 

r.xpcndi- 

liircs 

$1.1 7,M 
.11  .UO 
4.7.14.6 
5.R2<V(» 


rharces 
on  Drill 

$12.0 

6.S.S.4 
900.0 


Social  Otlicr 

I'xiHMidi-  E\iK-iidi- 

turrs  tiires 
$98.S  ?.1V4 

i42  2  4f*.^  6 

t..ifi.2  480.4 

fUOii  'i40.0 


Total 

$1,317.8 
4,.Sf)0.9 
6.526.5 
8,232.6 


Total    <14,881.0        $1,945.4        $2.1.19.2        $1.^9.4      $2n.6.?7.8 


FKANCK  21 

A  comparison  of  the  receipts  and  expenditures  sliovvs  the  stead v 
jfr()\vth  of  both  these  items.  But  as  expenditures  have  outrun  the 
receipts  in  ever  increasing  dcpree,  greater  dependence  has  con- 
tinually been  ]>laced  upon  loans.  The  additional  sums  raised  by 
new  tax  measure? have  lie<.n  more  than  absorlied  by  the  Rrowinj^ 
debt  ibarjjcs  and  by  the  deficits  in  the  civil  budpet.  These  figures 
are  summarized  in  the  following  table: 

RI-CFirTS    \N"I>   KXPF.NDITi'K'FS  OF   FRANCE, 
\VG.  1.  1914-nEf   M,  1917 

(tn  millions  of  dollars) 

Piriud                                        Expenditures  Rcvcnuo  Rt'ceipts  Loans 

>m{.   1-IVi.  ,V.  1<»14 $1..M7.8                  '$200.0  $12729 

Ian.    l-I Uc.   .?1,  191.^ 4,5^^9                       776.8  3,971  2 

hm.    l-Dic.   .'1.  l''lf) ()..S26.5                       9.W..1  5,4858 

Jan.    l-Dn-.   M,  1917 f(>.2.U.(>                    t'MW)  f  7,046.0 

Total     $20,6.37.8  $2,856.1  t?17,77S.9 

•  Fsliinaicd  cm  liasis  of  actnal  rtvcnues  of  $796,821,387  for  the  whole  year. 
+  La>t  three  months  estimated  nn  tht  hasis  of  a  vote  of  credit. 
t  F.stimate  of  M.  Klotz,  Minister  of  Finance,  Dec.  1,  1917. 


The  actual  loans  contracted  by  I-' ranee  duriii<^  this  peritxl,  as 
indic.'ited  'n  the  last  fifjure  in  the  previous  table,  are  shown  as  they 
existed  <m  necemlwr  31,  1917.  in  the  following  table: 

TOT.M.   BORROWINGS,  AUG.  1,    1914-DEC.  31,   1917 

Treasury   l.ills,  etc $4,.34O,0O0,OO0 

5   per  cent  loan  of   1915 2,f>4«,f)0O.(X)U 

5  per  cent  loan  t        916 2.275.000.000 

4  per  cent  loan  ■       1917 2,051.200.000 

National    defense   .  .liliKations U)K.OOO.O(X) 

Bills  sold  in  Hnjiland.  etc 1 .4t)8,000,000 

Loans  in  the   United  .States 600,000,000 

Advance   by    U.   S.   Kovernment 1.285,000.000 

.-\dvanccs  from  Banks  of  France  and  .Mneria 2.440,000.000 

.•Xdditional   liorrowint;s.   miclassitied* 500,000.000 

Total $17,775,800,000 

•Sine.    Oct.  1,  1917,  estimated. 

To  estimate  the  direct  cost  of  the  war  to  France,  the  strictly 
militarv  expenditures  plus  the  charges  on  the  new  debt  mav  be 
taken.     This  would  give  a  total  for  the  forty-one  months  of 


22 


i)iKK(  r  msTS  ni-  nil    pkisfnt  wah 


ii;i(.,8_Y).l»0U.U(H).  or  a^ciiii  trniii  the  total  i-xpenditnrcs  of 
S'liVi^r'srxlOM)  tlicre  mav  be  subtracted  the  nornial  exin'iiditurc^ 
u'hich  ii'i  the  last  i.cace  vear  were  about  Sl.-'7H.«MniHK-».  Thi< 
niethnd  would  L'ivc  Slf.,-'.?0,()CKMHK-»  as  the  vsa.  exiR-n.liturcs. 
Tiie  average  ol  these  two.  or  .Sl'..500,<X)(VX)()  would  probably 
,i;ive  a>  ilnsc  an  approximation  to  the  truth  as  is  possible  at  this 
time.  Seme  nt"  the  pr.^-ee.U  ^.l  the  new  debt  have  und.nibtedly 
been  applied  t..  meet  the  .jefuit-  in  the  ..rdinary  exiK-nditures. 


RUSSIA 


Tlic  cciniuinic  and  fmaiuial  >itiiatii)ii  in  Russia  was  a  sijiiinl 
one  in  1"14.  I  or  several  ytafi  the  l)uil(,'ft  had  shown  a  suq>liis, 
and  a  pcriiKl  oi  econiMnic  expansion  which  had  set  in  after  the 
war  witli  Japan  j,'ave  a  firm  fi>nndatii>n  for  the  state  finances. 
W  hen  tile  present  war  hejjan  the  jfoveniinent  turned  at  once  to 
the  lni|!erial  liank  of  Russia  for  assistance,  and  durinj;  the  first 
few  weeks  received  advances  averaging  alx)ut  $30,0(X),00()  a 
week.  These  aihances  have  cnntimied  di>wn  to  the  end  of  1917. 
Specie  payments  were  sus|)ende(l  and  all  checks  uixm  note  issue 
renicved.  The  amount  of  paper  money  issued  has  swelled  to 
enomious  proportions,  and  there  are  no  indications  that  these 
issues  w ill  stop  as  long  as  the  war  continues.  They  have  grown 
from  .<80().(XiO,(H)0  before  the  war  to  about  $8,000,000,000  at 
the  iiresent  time  and  are  increasing  at  the  rate  of  $416,000,000 
a  month.'  1 'rices  have  been  greatly  inflated  as  a  result,  so  that 
expenditures  have  been  increased  by  reason  of  this  factor  as  well 
as  I'V  a  re.Ti  expansion. 

The  financial  policy  adopted  by  Russia  was  similar  to  that 
used  by  Gennany  and  w  as  clearly  stated  by  the  minister  of  finance 
in  the  budget  speech  of  .March,  1916.  The  civil  expenditure 
would  l>e  defrayed  as  far  as  possible  out  of  taxation:  the  co<t 
of  the  w;ir  and  .-my  deficits  would  i^e  met  by  loans  and  paper 
money.  The  receipts  and  expemHtures  of  the  civil  budget  are 
first  presented  to  show  the  extent  of  the  deficits : 


'  St.itenient  of  M   NVrkra<«iflF.  Russian  Mini'^ter  of  Fin.ince,  ,-it  the  ^f(lscow 
Confcrtncf.  .\ug.  25.  1917.     The  Economist  (London),  Sept.  1,  i917,  p.  318. 


24 


iiiKiiiT  msTS  or  THK  i'kksknt  war 

Cl\  II.    KXI'KNDITLKKS   ANU    KECKIPTS,    1'>1-H'H7' 

{\n  niilli'Mis  oi  dollars) 


Yiar 
1914. 
1<M5. 
l'»l(). 
1917. 


Ordinary  Ordinary 

Kxpciiditiiri-s  Kfci-ii>l> 

!i;l,4(4  $l.-'-l'' 

1.3.)4  1..^''' 

1,587  1.-157 

3,()(.l  1.870 


Uchcit 

#15 

137 

130 

1.191 


Total S7M) 


?0,173 


$1,473 


1  arse  as  were  thfSf  -Iclk-its  which  ha.l  to  l>e  met  out  of  loans 
and  paiH;r  tnonev  .-.n.l  ivnst  to  that  extent  In;  counted  n,  as  part 
of  the  cost  of  the  war.  thev  were  really  larger  than  api>ears  troni 
this  statement.  In  l'»14  the  deticit  was  kept  down  by  stoppm- 
all  iMJssible  exiK-nditures  for  social  purposes.  The  small  det.c.t 
which  resulted  uas  -net  out  of  the  free  cash  in  the  Ireasury. 
•Ihe  following  year  the  ordinary  military  and  naval  esiienditures 
were  transferred  to  the  war  budget. 

On  the  other  hand  everv  effort  was  ma.le  to  increase  the  ordi- 
nary revenues  l>v  new  tax  measures.  The  war  cut  off  alx.ui  80 
per' cent  of  Russia's  foreign  trade  and  <leprived  her  of  customs 
revenues  amounting  to  J=230.a)0.0(10.  By  the  abolition  ot  the 
vodka  monopolv  the  government  sacrificed  revenues  amountmg 
to  ahotil  S430,bO(>,0(XX  The  revenues  from  this  source  ha\e 
shown  the  follow  ing  decline  : 

RKVKNUK  FROM   SPIRIT   MO.XOPOLV 

1913 j449,650.n(X) 

1914  .     2.M.9.SO.00O 

1915  l,5..?f)lV(K» 
1<)1(,  2.5,f)HO.(XK) 
1917 24,S(X).000 

I'.ul  new  taxes  were  immediately  levied  ;md  the  rates  of  exist- 
ing taxes  were  raised.  There  was  an  increase  in  the  city  real 
esUUc.  house,  and  iwll  taxes,  and  in  the  postal,  telegraph,  and 
railroad  char,L;es.  Uirge  sums  were  obtained  ivom  excise  taxes 
on  sugar  and  tobacco.     But  the  most  important,  new  measures 


>  Russian  Yi-arbook.  1916.  ami  Inidsi't  reports 


KISSIA  25 

introduced  were  the  j;niduated  income  tax  and  the  excess  war 
])rofits  tax.  l>nth  of  which  were  new  to  Russian  linance.  The 
vH'ld  of  the  principal  taxes  for  1917  was  estimated  in  the  la-t 
lnKl.:;'jt  ,- s  follows:  Income  tax.  ,S05,(XX),l)(X):  war  profits  tax, 
Si;.?('  ,JOU:  tobacco  excise,  ?45.000.0(X):  sugar  excise.  $29,-MX).- 
(X'O:  .  then  new  fixes.  $28.00<">.0lX) :  increases  in  existing:  taxes, 
4.;.^.- 000,000;  state  railways,  $130.00(VXK);  total,  .S4/"9.')0O,U00 
additional  war  revenues.  By  act  of  July  10.  1917,  finally,  an 
enicrj^ency  income  tax  has  been  levied  on  all  persons,  assi>ciati(jns. 
etc.,  in  addition  to  the  ordinary  income  tax,  on  incomes  over 
$3,0(X):  this  was  for  the  year  1917  only. 

The  war  expenditures  and  receipts  lia\e  been  as  follows  during 
the  course  of  the  war; 

\\.\K   KXPKXDITURKS  .WD   RKCI-if'TS,   1914-1917 

(In   millions  of   iliiUars) 

I'lridd  Kxpoiidituris  Receipts 

Loans     I'apor  .Mimey 

.■\UK.   l-Dcc.  .M.    1914 $1.67,!  $82,?  S54« 

Jan.    1-Dec.   .il.    191.S .S.oJl  ,?,76.S  \,XW. 

Ian.     l-Dec.    ,11,    191f> S,^^)  3.901)  1.74^) 

Jan.     1-UfC.   ,51.    1917 1().0(X)  4.IXK)  4.98() 

T..tal $20,894        $12,488  $8,612 

To  the  war  ex|ienditures  here  stated  should  \k  added  the  def- 
icits in  the  civil  budjjets  which  were  to  lie  met  from  the  ])roceeds 
of  lo.'ins  and  taxes.  This  sum  is  .tfiven  in  a  previous  table  as 
$1.473,IXX).(XX),  which  is  prolvably  an  UTiderestiniate.  Rut  it  this 
be  added  ti)  the  expenditures  in  the  forefjoing  table,  expenditures 
appear  to  be  S_'l,3ri7,0(X1,0<Xl  and  the  total  receipts  $21,100,- 
0(XI(XX). 

The  .ijrowth  of  the  debt  of  Russia  may  now  l)e  presented, 
though  it  must  be  admitted  that  the  ultimate  validity  of  the  final 
figure  is  a[)parcntly  0|ien  to  question  on  more  than  one  score. 
However,  it  is  believed  to  be  approximately  correct  ;is  to  the 
facts ; 


2(,  DIKlUr    fdSTS   n|-    llll-.    I'KKSKSr    WAK 

C.KOWTH  OK  THE  VVAk  DKBT.  1914-1918 

(.In   millions  I'l    'li'llar-.! 

r.'tal  Amount 

Date  ..tUibt 

Jan.    1.    1914 S4.414 

Jan.    1.    1915 .\i.'7 

Jan.    1.    19U. 9,0(K) 

Jan.   1,   1917 Ui.KOO 

Ian.   1,    1918 ^<>..^«> 

l.iss   iirowar    ilil't.  4.414 

War.iibt <22im 

L)l  the  t..lal  of  Si-',CX10.(X)0.a'0,  however,  approxiinately 
$9,0U0.000.C)Q()  consists  of  non-interest  bearing  paper  money,  w 
that  the  interest  hearin-j  debt  ihie  to  this  war  is  only  about 
S13.l«H),(KK).UK.).  In  the  next  table  an  attempt  is  made  to  classify 
this  debt. 

WAK  LOANS  OF  RUSSIA.  DKC.  M.  1917 
(In  millions  of  dollars) 

5       p.  r  cent  loati.  Oct..  1914 ?l^-^. 

=.       |)tr  c.nt  loan.  Kil...  191.S ^V'^ 

5' :.  per  .cnt  loan.  May,  19I.S ■]  -:• 

5' .;  per  cent  loan.  Xov..  191.5 .iL-'. 

5'  per  cent  lo.in,  April.  191(> Y^f} 

5' '   per   cent   Ian,   Nov.,    19U, "00. 

5  ■   per   cent   loan.   April.    1917 ■■•;  ISOO. 

4      per  cent   Kxclieipier  lionds.  Anc  .   1914,   March,  19b  .ilO. 

Currency   loan,    April,    1915 '"■:• 

Loan   In-   I'niteil    States   government -J^- 

Treasury  bill-   -J^J"- 

Bills   (liscounleil   ni   I'.nsland '^ 

Hills   discounted   in    France ■'**}■ 

Hills  iliscounteil  in  Japan }^ 

Loans   in   tlie   United    States -O"- 

$12,475 


ITALY 


Although  Italy  delayecl  her  entrance  into  the  war  until  May 
24,  1915,  her  war  exiitnditures  may  be  said  to  ha\e  l)^gun  at 
the  same  time  as  those  oi  the  other  l)elligerents  whose  active 
jjarticipation  commenced  earlier,  for  the  costs  of  armament  anil 
mobilization  durint;  the  months  of  prep;iration  entailed  heavy 
burdens.  Her  expenditures  trf>m  August  1,  1914,  to  the  eiid 
of  1''17  mav  be  stated  as  i'dHows: 


ITALY'S   WAR  F.Xl'KXDITLKKS.   AU(i.   1.   191-4-DKC.  M.  W\7 

tVridd 

Auk.   1.   lVl-4-Mav  M\   191.S   (preparation) $18«).O77,0(JO 

June   1.   iyi5-luiK-  M\   1916  (13  mmitlis  i l.HS4,.«7.0(X) 

Julv   1.  191()^hiiii'  M).  1917   (fiscal   xiar) i,4,f7.914.tK)() 

July   1,   1917  Doc.  M.   1917   (six  ni-iith-) *1.575.U(X).IK)0 

Total S(..077.378,(X)0 

*  l-'.stimati-(l  cm  the  liasi>  of  a  niontlily  ixpiuiliturc  ul  $.to2,5(X),(JO» ),  tlic 
average  ol   the  tuiUe  inoiiliis  eililiiig  I  i.toher  .'0,   1917. 

These  ex|)eiiditures  do  nut  include  the  ordinary  military  ex- 
penditures coiUained  in  the  prewar  budgets,  whicli  amounted  to 
about  811^8,018.000  a  year.  Vi>r  the  thirty-one  months  of  war 
this  would  amount  to  $487,_'f)4,tHX),  and  if  this  be  added  to  the 
.above  figures  it  would  ,:;ive  a  total  of  al»)Ut  S'i,^>lX),iKH),(K;0. 

The  money  neccssar\  to  defray  these  ex|)enditures  was  raised 
in  Italy,  as  in  the  other  countries,  primarily  by  means  of  loans. 
I'irst  the  liank  of  It.al\  and  other  banks  made  statutory  advances 
to  the  government,  on  terms  similar  to  those  of  the  I'ank  of 
l'>ance. 

Treasury  ))ills  were  also  made  use  of.  but  not  to  the  same  extent 
as  in  luiglantl  and  l-"rance  owing  to  the  slighter  linancial  de- 
velopment of  Italy.  Chief  de])endeiice  has  l)een  placed  on  long 
term  lo.ms.  for  which  moreover  the  dnrition  has  from  the  begin- 


'i-^'r-;- 


. '»r  ..\ 


>^»\  ■  *1: 


T5r 


2s  i.ii<i:<T  iiisis  c'l-   rm:  pki  si  \  r  w.xi' 

uuv^  W;u  llxcd  at  a  Un^  I'^-n-'l.     Alx.ul  three  quartets  ■  •"  the 
rcai]>ts  ha\c  been  derived  ir.  •n,  this  >ource. 

The  I'mames  of   Italy  were  ii'it  in  14. .od  C' iiiditi.  mi  war 

broke   nut.   bni   have   ucvertlieless    stood   the   sh.K'k    iairl>^well. 
During  the  three  fiSLal  years  ending  Ji"ie  MK  1912,  1913,  and 
I'M 4,    tliere    were   deticit-    whicli    averaged    about   S36,U(.)O,00U 
yearly.     ( )\\  ini;  to  the  oiirnreak  of  the  war  a  still  lari,'er  detict 
threatened  in  the  follow  nii^  year,  so  increases  in  existint,'  taxes 
were  made  in  the  fall  of  l'»14.     Kates  were  raised  on  stamp  dnties 
and  bills  of  exdiani^e.  on  motor  cars  and  motorcycles,  on  imporvs 
and  export; .  and  on  incomes,  and  a  new  tax  was  introduced  on 
tickets  to  movinj:  picture  shows.     A  year  later  increases  were 
made  in  posta',  tele.u;rai)h  and  telephone  charf,a-s,  furtiier  addi- 
tions were  made  (o  the  stamp  duties,  and  two  new  war  taxes 
were  iiif,  oihiced.  1  ne  on  the  exemi)tioiis  from  military  service  and 
the  other  on  tlie  fees  ot  directors  of  joint  stock  companies.     A 
tax  on  war  profit-  wa;^  introduced  -oon  after.     The  revenue  re- 
ceijits  liave  been  as  follows: 

KKMxii-:  uF.i  Kii'is,  Jl•|.^■  I,  lyr  DKC.  .^1  m? 

l')i;   l(r      .        ...  .sdJ.WHMKH) 

1yl(^-17         761.4(H).()II<) 

1017  IS    ((,  mc.-.)«       4<H).(100.(KM) 

•r,,t;il «2.1.^),WMMKK) 

«  |-:>tiinatc(l  "11  ha-is  uf  l.iitlgct  for   191748. 

.\s  the  normal  peace  receipts  were  about  $400,0{X).(X)0  per 
annum,  which  would  be  ,S  1,4(10,000,000  for  the  tlircc  and  one- 
half  vears  comprised  in  this  table,  it  is  evident  that  the  additional 
war  taxes  and  pulilic  scrx  ice  receipts  r.moinit  in  round  numliers 
to  about  S600.000.00ft.  But  this  is  all  al)sorbed  by  tlie  increasing- 
debt  charjjcs.  which  amount  to  over  ,S200,000.000  a  year,  antl 
the  other  increases  in  the  civil  Inidset  owing  to  the  w<-r.  Con- 
sequenth  the  war  expenditures  have  been  met  practically  alto- 
"Cther  out  of  loans  and  otticr  credit  instruments. 


I  IMA  29 

The  i;rn\\tli  nf  tlie  war  debt  is  indicated  briefly  in  the  follnw- 
ing  table : 

WAR  DEBT,  191S-17 

Period 

Ian.   1   IKc.  M.  1M15 $<)50.nOO.nOO 

jail.   I   IXc.  .U.  1916 2.5<.2.(IIXM»() 

Jan,  1   D.c.  .11.  1917* 2M)t,.m)m) 

T,,tal $^),  11 8.000000 

♦  l.a^t  si.\  ninnlli-.  t-.tiinati(l  nii  l>a>is  i>t  cstimati-  of  Italian  correspondence 
in  The  liioiuiiiust   il.niidoiU,  Sept.  12.  1917,  p.  425. 

Italy's  debt  can  !«  given  as  it  exi.sted  at  the  end  of  the  last 
fiscal  year,  June  30.  U)17;  snlisecjuent  oi)erations  are  not  yet  re- 
I>orted  and  can  therefore  uiily  Ije  estimated.  The  followins,' 
statement  is  ba-ed  on  the  official  returns  of  the  Treasury : 

IIAIAS  WAR  DEBT,  DEC.  .11.   1917 

4'  .  per   cent   Ir.aii.    Fan..    191.S $2IX).00().(KT) 

4' '.  per  cent   1.  .an.   jnlv.    191.^ 2.?0,(X)0.(XIO 

.^       per  cent   loan.    Ian..    1916 .=;2(i.(K)0,00() 

.^      per  cent   loan.  Jan..   1917 722.(K*).(X)0 

Treasnry  coupon   lionds    ( .S^f  ) 2(>0,(XX).()(X) 

Britisli  and    Ereiicli   advances 7.^M100,(XX) 

Loans    from   tin-    I'nited    States* .iOO.aiO.OOO 

Bank  and  state  notes 621.200,000 

Treasnry    l.ills    (estimated) 700,(X)0,000 

Tntal  $4,509,800,000 

Estimated  loans  July   1    Dec.  ,il.   1917 l.fiOO.OOOOOO 

Total.   Dec.  M.    1917 $6,109,800,000 

*  .Actnal.  Dec.  .11.  1917;  (lO/iiiirr.  iii/  and  I'inaucuil  Chronicle-,  Jan.  5.  1918. 
p.   19. 


..'r^-4-\/ 


OTHER  ENTENTE  ALLIES 


The  exiH.Muliturc>  .^t  lldjiiuni  h:i\c  Wm  financed  cliit:Hy  by 
a.lvanco  .m  the  i^art  ,.i  Creat  Uritaiii.  I'rancc.  and  more  recently 
,.1  the  Lnited  Stale.-.  I'lie  advances  of  this  government  down  t, 
December  M.  Vn7.  amounted  to  S7/",4(X).01K>.  The  total  war 
costs  of  Hclgiiim  may  he  estimated  at  $'H)0,iXX),()0(). 

Serbia  likewise  has  issued  no  loans,  but  has  had  her  cxix;nd!- 
lures  defrayed  out  oi  advances  by  (ircat  P.ritain  and  France, 
iier  total  uar  coM>  may  be  .uiven  as  S7.S0,tHX).000.  of  uhich 
$4.UJ<),tHHt  c..nsi~t  of  a.lvances  by  the  United  States  government. 
Rumania  ha>  been  financed  for  the  most  i)art  by  the  same 
powers.  No  record-  could  l)e  found  of  any  loans  by  that  country, 
'i  he  I'nited  Slate>  government  advanced  S5.(X)0.UK>  to  Rumania, 
but  this  was  done  through  Russia  and  apjiears  in  the  loans  to  that 
country.  Tiie  total  war  costs  for  Rumania  were  about  $7(A).- 
(XHlOtJO. 

.\iontene,;;ro  i-  (.-tniiated  to  have  spent  about  SJ1.UM),0(H). 
Cuba  hh<  i-ned  a  "war  loan"  of  ^^.V ),()(X.).0(.)0. 
hipan's  e\|)cnditures  may  U-  estimated  at  about  S20«>,r^^MHK). 
but  half  of  thi>  cou-isted  of  loans  ti>  Russia  and  -hould  be  de- 
ducted a<  it  has  already  been  counteil  as  ]>art  of  Russia's  cost. 
These  iten>-  make  a  total  of  S_'.5'M  ,('H>O.0(X).     Hut  such  a  tabu- 
lation leaves  out  a  ninuber  of  cmuitries  which,  while  they  have 
contributed   little,   in   a   military   way.   have   incurred   very    real 
expenditures.     If  the  ligurc  iust  given  were  doubled,  a  generous 
e-timate  would  1k'  made  to  cover  all  omissions.    The  expenditures 
of  the  -mailer    Mlied  -tales  mav  then  be  set  down  at  $?,(R)().- 


GERMANY 


The  orij^inal  iiolicv  adoiitcd  In  (jcniiany  of  rmaiuin^'  the  wnv 
was  hv  loans  and  the  issue  of  paper  money.  Taxes  were  not  lo 
he  inijKJsed  durin.t;  the  period  of  the  war,  accordiut,'  U>  the  |)laii 
announced  by  Dr.  Karl  lleltferich.  the  IniiK-rial  Minister  of 
I'inance.'  Thev  would  not  only  he  burdensome,  but  they  would 
Ik;  unnecessary,  for  this  Iniancial  ]>oIicy  was  based  upon  the  as- 
suniptinn  of  a  speed\  victorx  and  the  collection  of  an  enormous 
indemnity   from  the  conquered  [)eoi)les. 

When  war  liroke  out  the  .^^overnment  turned  al  once  to  the 
Keichsbank  for  its  immediate  needs.  The  relation  of  the  Keich" 
l)ank  to  the  hnperial  i;o\crnment  is  \ery  close,  and  from  the 
beginning,'  the  resources  of  the  bank  were  placed  at  the  disposal 
of  the  fiovemment.  The  metallic  reserve  in  the  government  war 
chest,  amounting  to  Sf)O,(X)O,0OO,  was  handed  over  tf>  the  bank, 
and  against  this  bank  notes  were  issued  in  exchange,  b^tr  the 
first  three  months  the  war  was  conducted  with  money  obtained 
from  the  Reichsbank.-  but  by  Septemlier  the  floating  debt  had 
becfjinc  uncomfortably  large  and  it  was  funded  by  the  issue  of 
a  loan. 

This  was  evidently  done  in  pursuance  of  a  carefully  thought- 
out  ])olicy  of  financiiig  the  war  by  means  of  advances  from  the 
Reichsbank  and  the  sale  of  sliort  term  'i'reasury  bills  and  then 
funding  these  at  half  yearly  intervals  into  long-term  lx)nds. 
Every  six  months  since  the  war  began,  in  Septeinber  and  March, 
the  (iermaii  Treasury  has  issued  a  popular  loan.  The  direct  costs 
of  the  war  to  the  government  m  v  therefore  be  gauged   fairlv 


'  Ruilsct  siii'tch  (if  Marcli.  1915,  aiul  aRain  .\iij;ust  20.  1915. 

-  Ill  the  peridi!  Aug.  1-15  the  bank  advanced  $,?6l..5fl(1.n(10  to  the  i^overn- 
mcnt.  Die  Kricustinaii^cn  dcr  -uropaischcn  (irossm.ichte,  bv  O.  Schneider. 
Schmollcr's  Jalirbucli  (1915),  39  Jahr,c;anp,  ,3  Heft.  266. 


-'A 


^J  1)IKI<    r    (HSTS   01--   Till     I'KISI   vr    W  AW 

aauratclv  l.v  the  aniounl  u,  the  lo;„i-.  at  leu.l  dun.,:.'  the  earlier 
period.  Owing  to  the  secrecy  nmn.tained  l,y  the  t  iennan  ^ove.  ;- 
Inent  rej,^ardinK  its  littancial  tran>ac.i.>n.,  and  die  dUtKulty  o. 
.ecring  the  lew  facts  which  ..re  pnUh^hed.  these  and  the  vote, 
of  crecht  are  practically  the  only  accurate  .lata  ui^.n  winch  an 
estimate  may  be  based. 

hnperial  revenue^  for  du-  fxcal  year  en.hn«  March  M.\n  . 
had  been  estimated  in  the  bnd^a^t  nf  the  preced.nR  y^-ar  at  i>f<.M..- 
770  .'.^0  This  was  for  the  civil  bu.l.^et.  which  was  sharply  d^<- 
ti„..ui.hed  from  the  nnlitary  bu.h.-et.  The  latter  was  to  be  met 
.oleb  bv  l.ans.  The  -onner  was  to  Ik-  met  by  existms  taxes 
and  other  ^.-urco  of  revenue  >o  lon^  a-  it  balanced.  Only  m  the 
event  .  vf  a  deficit  xv  ould  .vi-  new  taxes  be  imi>osed. 

(iwino  to  the  almost  complete  interruption  ot  lorei,i,m  trade 
tiK-  receipts  from  cu^to,u>  duties,  which  amonuied  to  S_'().S,3_.S/xM 
i„  lop,  declined  i;reatlv.  but  a  .leticit  fnr  the  year  was  prevented 
hv  tranM'errinu  the  whole  of  the  milit.uy  aiul  naval  outlay 
,  amounting  in  1013-14  to  S.V;4.42.V0(H))  fn»ni  the  ordinary  cum 
I>,„l..et  to  the  extraordinarv  ^^ar  bu.l.uet.  In  this  wrfv  not  onlv 
uaA,  deficit  prevented,  but  Dr.  lieUterich  was  able  to  announce 
a  surplu-  for  the  vear  of  $54,750.(^:0. 

The  followin-  March,  however,  in  presentim;-  c  budget  tor 
the  fi^c-d  year  1016-17.  Dr.  Helfferich  stated'  that  owin.t;  to  the 
<rreat  imrea-e  in  the  service  nf  the  lm|K;rial  <lebt.  which  was 
S575.750.IX"'.  a^  a^raiiist  S.^17,iHH).0<  lo  in  1015,  and  .S6_'..i00,(KX1 
"in  the  la-t  peace  bu<l.-et.  even  this  formal  balance  conhl  not  be 
maimaine.1.  In  the  ordinary  bud-et  there  was  a  fallin-  off  ot 
over  .<,^^r.,fW)O.0('O  in  i-ecei])ts  as  compared  widi  1015  and  an  in- 
crease of  over  $S4.t^'H).00O  in  expenditures,  which  i^ave  a  deficit 
.,f  .^13t.0<'Hl.fKX\ 

T..  meet  thi--  deficit  new  or  additional  taxes  were  authorized 
on  war  pn-hts.  tobacco  and  ci.sjarettes.  bills  of  ladinc;  and  receipt^, 
and  increa-.e<l  postal,  tele.oraph  and  telephone  rate--.  The  esti- 
mated Mcl.l  from  these  taxes  uas  $125,(W.00(\  but  the  actual 


'  r.iiil(;ct  -p  ■  Ji  "t   Nlarch  16.  I'Md. 


r.lKM  \\\ 


.33 


yield  l:as  liffi>  kept  a  >ccrt't  a>  ha^  every  vital  point  connected 
with  (iernian  finance. 

By  the  end  of  the  year  the  debt  charges  had  risen  to  $891.- 
5l)0.l)U()  and  a  larger  deficit  in  the  ordinary  bndget  was  reported.' 
which  made  iieces>ary  still  inrther  recourse  to  ta.xation  to  Main- 
tain even  a  formal  balance.  The  new  taxes  authorized  at  this 
time  consisted  of  a  tax  on  coal  of  ?i7]2  to  30  cents  per  ton,  a 
traflic  lax  on  freij;ht  and  passen,y;er  traffic  on  railroads  and  in- 
ternal shippin,!,',  an  increase  of  _'()  per  cent  in  the  war  profits  tax. 
and  a  tax  on  the  Reichsbank.  The  total  yield  from  these  sources 
was  estimated  at  $31_',50O,0(,)O. 

In  adilition  to  these  annual  taxes  a  capital  levy  on  pro|)erty 
was  made  which  was  to  bring  in  S5t.X),0(Xt.0O().  This  seems  ru 
ha\e  l)een  a  single  contribution  rather  than  a  recurring  impost. 
.\ltogether  the  amount  collected  by  the  Imijcrial  government  by 
additional  taxation  during  the  war  seems  to  have  amounted  to 
about  .S''37, 500,000. 

In  addition  to  this  many  ex]K'nses  fell  upon  the  separate  states 
and  municipalities  which  in  the  other  l>elligerent  countries  arc 
b(jrne  bv  the  central  government.  It  is  imiKissible  even  to  esti- 
mate these,  but  it  is  known  that  the  existing  taxes  in  the  states 
and  li>cal  governiuents  have  l)een  greatly  increased,  in  some  cases 
Ixiing  more  tli.in  doubled.  It  has  been  estimated'  that  the  single 
item  of  expenditures  for  the  supixirt  of  the  soldiers'  familie.;, 
which  in  Gerniany  is  met  by  the  municipalities,  is  537,500,000  a 
month,  which  would  amount  for  the  forty-one  months  of  the 
war  from  August  1,  1914,  to  necemlier  31,  1917,  to  SI, 537,500.- 
000^ 

1  he  ex]x;nditures  of  Imperial  Germany  on  the  war  are  best 
estimated  by  taking  the  votes  of  credit  granted  by  the  Reichstag. 
.\s  it  is  constitutionally  necessary  to  have  the  money  appropriated 
by  I'arliament  these  votes  are  matters  of  public  record  and  the 
figures  mav  be  accei>ted  as  accurate.  Xo  details  as  to  how  these 
sums  are  expended  are,  however,  made  public.     From  the  l)egin- 


'  BiulRct  speech  of  Feb.  23.  1917. 

=  Fhuvic-Archk:  1916,  Bd.  23,  Heft  2,  p.  228. 


'^^'^^?r 


r 

in 


--":-a 


^  „1KK(  r   inSTS  UK    nil,   I'KKSKNT   V  AK 

,,„,  .,f  the  .ar  ,o  the  c.ul  o,  1  .cccutn^r.  1017.  the- Reichstag  has 
granted  ten  vnte<  ..f  credit.  a<  t<.lln\vs: 

cr.KMANVS   V()T!S  ol-    (.  KKDIT 

,    „„  ,  $l..'.^(M)"H).l»K) 

1.   .\liKU>t   1.  l^H,,  :  .        IJSiMXHMKIO 

.>.    D'H-ml.tr    •;•     •"•* '^dd.lHKMKKI 

,?.  Marcli  iJ,      '  •: y^oii.iXMI.OtK) 

4.  AuKU-t  .U.   '"•;•■: J  .^MKMMJ.dOO 

5.  Deccmlor   -■»,    Wl.-' liKKMKHI.ltlXI 

7.  ( )ct..l..T   M)    I'M  .._ ,  75,i,(HIIM»«l 

«.  l-'chruary   2.V    r'l/ ,'7;,iiK»M»i«» 

10.  Dii-cmlur  1.  r'l? ___; 

J.'7.2.-().(X)0,lHXt 

U  was  Stated  at  the  ,„nc  the  last  V...  wa.  , ranted  that  the 

,;er,n.n,  treasttrv  had  f.nds  stUTu-ietU  to  carry  .t  t,>  the  end  ut  th. 

tl     dar  vear  and  that  the  addui.nal  ^3,r5...*HK),(K)0  was  nece.- 

,-v  to  n.;et  the  c,,.,.  of  the  .ar  fron,  that  .late  to  the  etul  o     he 

cal  vear    March  M.  I'HS.     It  this  he  accepted  a>  trne.  atid  the 

•u,  In  oi-  this  las,   vote  1.  stthtracted.  there   stdl  rentatns  the 

"e„orn,ous  .un,  of  S2.V5(H..(KX).()CH)  as  the  war  expen.htures  to 

Decemlar  31.  l')17.  .     ♦,    ,„  ;  •  r>m. 

\.  H  hasis   for  estin.atn,,  Ciennany-s  war  costs  there  ,     one 

,„;er  set  of  figures  available,  and  these  are  tlte  '--  -:^;;  ^• 
,he  hnnerial  S"vernnte,U  down  to  Hecemher  31.  1'>1/.  Scv  n 
;!■  theiehave  thus  far  been  Hoatcl.  v  hich  are  de.cr.l.d  n,  the 

following  tabic: 

,;kumanvs\vaki..ians 

,    Set.   10  1-).   IW.  )  Tr.Wv  lM.mls.  , .^^'^'Ij;   JJ,'        ;^        ,^\  ;         '".. 

2    l^lK27-N!arc!M9.101.^    *lm,.cri,-i11oan  -'^^{y^Um        5        -W''.-        l''21-2.' 

4.Ma.„4  22.i.u,.  \-r;;J\'i:o;:ib.     ;mo.j;,;;;>     4..  ^       1^^^^ 

Un.pcrial  Inan  "'i^^i-S         4'  •    95  192.V32 

,     ,    .      1   W  l'>17  (Imperial  loan.      I  X192..W(XK)  4,;  .jg  (.) 

(..  March  4- April  18.191/.  ,  Tr^.;,si,rv  bcinh.  (  (  S  98 

^^       ,„,,  (  Imperial  loan       j  _,  ,5,,.4i5iMiO  [j,  ,  gg  (.) 

7.  .^opt. -Oct..  1917,  I  Trt-asury  tioiiils,  \  ^  '  ^  - 

T.^ta!     ?18..V4ft.41 .5.000 

(M   Redcema'  '^  l,y'<lrawm«-   fmm  Jan.  1.  1918,  at  110  per  rent. 


Irrrdeeniihu 
before 

piJ4 

1924 

l'i24 
1924 

1''24 

1924 

1924 


GFKMANV  '  ■'' 

In  additi.^n  to  the  lumlfd  debt.  ani..uini«g  at  this  time  v> 
$1  340.31  MM HK>.  there  i>  a  lar^e  tloatinjj;  delrt  consisting  of  out- 
standing Treasury  bills  whose  mass  was  too  large  to  1*  funded 
l,v  the  last  loan,  successful  as  that  was.  and  which  has  i)een 
suelled  since  bv  the  dailx  borrowings  of  the  German  Treasur>'. 
The  last  ot^^cial  estimate  of  Germany's  expenditures  was  ma<k' 
last  lulv  bv  Cum  von  l<o<lern.  the  l.niH.-rial  Mi.uster  of  l-mance. 
when  requesting  the  ninth  vote  of  credit.  He  announced  that 
the  monthlv  exi.en(liturc  from  February  to  May  had  Iwen 
$750,l)(H).a;')  a  month.  This  would  give  a  daily  expenditure  of 
$1^100  (XK\  In  Niew  of  all  these  facts  it  is  probably  no  exag- 
^ri^ralion  to  estimate  the  floating  debt-Treasury  bills,  a.lvances 
of  the  Heichsbank.  etc.— at  $.s.(H^l.tXX).()(M). 

The  sums  raised  t-.  defray  the  cost  of  the  war  to  Germany  to 
the  end  of  the  year  U'lT  may  then  l)e  stated  as  follows: 

ktXKlPT.S  1)1--  GKRMANV,  AUG.  1.  1914-in:C.  .-^l.  1917 

War  clu-t  fund .W7.5iH».'KHi 

Additional  taxu«     ^^  \-,\.H*).».» 

}f^"^  ■■■,■■;,'', s.iim.iKMMHKi 

Tri-asiiry  bilb,  cic '___^ 

P  .  ,  $24,149,000,000 

liital     

'vs  this  figure  agrees  so  closely  with  the  sum  of  the  f^rst  nine 
votes  of  credit- S_'3.30(>.C»(X).00O— this  may  l)e  accepted  as  pre- 
sumptive evidence  of  its  correctness. 

But  huge  as  this  sum  is.  it  bv  no  means  measures  completely 
the  cost  of  the  war  to  Germany.  In  the  case  of  the  other  nations 
the  monev  outlav  mav  be  accepted  as  a  correct  statement  ot  cost. 
Not  so  Gemianv.  For  years  she  had  l>een  preparing  for  this 
conflict  and  had  collected  immense  stores  of  materials,  munitions, 
and  supplies  of  everv  kind.  Part  of  the  real  cosi  is  represented 
therefore  bv  outlaxs  made  in  previous  years.  Since  the  war  l)egan 
she  has  moreover  exacted  tribute  from  the  .«cupied  territorj', 
which  was' estimated  in  October  of  this  year  at  $1,600,000,000 
in  the  case  of  B-lginm  alone.'    The  exploitation  of  the  resources 

1  Washington  A-sociatid  Prcs.;  dispatch  of  October  20.  1917. 


_V,  l>IRK<  r  CnSTS  <>V  Till     I'KISIM    WAR 

and  \K-vv\e  of  I'.clK'iuin.  ivrthern  Francf,  I'olan.l.  aiul  l<Muniatiii 
must  also  be  crauited  in  anv  coniparis-n.  a-  such  item^  ha^e  been 
paid  for  in  Htlur  cnntriev  TakinK  all  thot-  facts  int..  c.nM.ler- 
ation  the  real  est  -f  the  war  to  the  Gennan  F.mi>ire  at  the  end 
of  three  and  a  halt  vears,  irrespective  of  the  burdens  (,n  the  states 
and  nnmicipalities.  mav  be  reckoned  as  considerably  m  excess 
of  stj;  r(M).(X)0,000. 


AUSTRIA-HUNGARY 


l-he  tiiiances  uf  ihc  dual  empire  were  probably  in  worse  con- 
clitu,n  at  the  outbreak  of  the  war  than  were  those  ot  the  other 
l,cllr  rent>^.  For  ten  vears  the  ^'ovemnient  had  been  facnig 
deficits  nwing  pruuarily  tu  the  cost  of  armament,  and  had  met 
these  b>  bnrrnwmK.  Inuseqiiently  the  debt  was  large  and  the 
credit  ui  the  country  impaired. 

When  the  war  began  the  bank  act,  reciuirmg  a  40  jkt  cent 
reserve  to  be  ' -'d  bv  the  Imi)erial  Austro-liungarian  Lank 
against  its  nut  suspended  (which  meant  a  susiK^ns.on  oi 

specie  payments,,  .  luWication  of  the  bank  reports  was  pro- 
hibited and  a  general  moratorium  pnx-laimed.^  The  note  issue. 
have  since  U-en  greatly  increased  as  the  suspensum  of  speae 
pavments  removed  the  check  on  inflation.  By  the  end  of  191/ 
thev  were  S3.4ai,OOO.0ai.=  To  i-rocure  funds  to  meet  its  im- 
mediate needs  the  government  entered  into  an  arrangement  with 
the  brnks  hv  which  thev  were  to  advance  money  in  return  tor 
Treasury  bUls.  which  they  agreed  t..  sell  to  the  public  on  com- 
mi-sion.'    Xo  statement  has  l.een  published  as  tu  the  amount  of 

these  issues.  ,       k     ■     r 

In  Xovember  the  first  funded  loan  was  issued.  As  m  Ger- 
many so  also  in  Austria-Hungary  these  loans  have  followed  a 
prearranged  plan  and  have  been  issued  at  half  yearly  intervals 
even-  Xovember  and  May.  In  contradistinction  from  the  Ger- 
man policy,  however,  the  proceeds  of  the  loan  were  not  used 
to  repay  the  advances  of  the  bank,  and  to  fund  the  outstanding 
Treasury-  bills,  but  were  applied  to  the  payment  of  contractors 
and  other  future  needs,  while  the  floating  debt  was  renewed.' 


1  \    F..lern,  Oe.terr.ich-Unsarn<  Gel.l  und   Kr.Mitwv^cn  im  Kri.gc.   1914, 
In  Archil'  fiir  soziiih^issensiliaflfii,  Bd.  40,  Heft  J. 

2  The  Chrvnicle,  Jan.  5,  1"518,  p.  18. 

3  O.  Schneider,  he.  cit.,  p.  272. 


38  DIRECT  COSTS  (IF  THE  PRESENT  WAR 

So  far  as  can  be  ascertained  no  portion  of  the  cost  of  the  war 
has  been  met  out  of  taxes.  Indeed  the  cl\  il  budget  has  shown  a 
steadily  growing  deficit,  owing  to  the  increase  in  the  debt  charges, 
which  tlie  ordinary  taxes  can  not  meet. 

In  the  budget  debate  of  Octoljer  30,  1917,  in  th-  upper  house 
of  the  .\ustrian  Kcichsrath,  Uaron  Ernst  von  Plener,  in  an 
official  report,  stated  that  the  cost  of  the  war  to  .\ustria  to  the 
end  of  the  year  would  amount  to  55,000.0)0.000  crowns.'  At 
the  nonnal  rate  of  exchange  this  would  equal  $11,144,650,000. 
Three  weeks  later  Premier  Wekerle,  of  the  Hungarian  govern- 
ment, stated  that  the  war  e>:i)enditure  of  Hungary  up  to  that 
time  was  $3,500,000,000.  .\lthough  the  dispatch  was  not  clear 
this  would  seem  to  have  Ijeen  included  in  the  larger  sum,  thus 
leaving  .Xustria's  share  .^^r. 500.000.000. 

In  addition  to  loans  the  largest  dependence  was  i>laced  uixjn 
Treasury  bills,  which  were  sold  to  the  Austro-Hung.-xrian  and 
other  banks.  Large  sums  were  also  received  from  the  Ciemiau 
government  and  from  German  bankers.  These  are  summarized 
in  the  following  table : 

DEBT  OF  AL'STRI.V-HUNGARY,  \VG.  1.  1914-DEC.  31,  1917 
Loans  $7,953,000,000 

Treasury  bi'lis   ^'^^^'SUi'I^l 

.Advances   from   Germany j/3,UUU.UWJ 

Loans   from  Gorman  hankers 9<X),000,0»«> 

Total  $11,128,000,000 

The  funded  debt,  consisting  of  seven  loans,  issued  at  halt 
\early  intervals,  now  amounts  to  $7,«53,000,0(X).  The  several 
issues  are  given  in  the  following  t.ible : 


1  The  Chronicle.  Nov.  3.  1917.  p.  1738. 


ArSTKIA-IUNCARV 


39 


Xo 

1. 

Date  of 
1-siie 
N,  v..    1914 

) 

M.iy.    l')15 

;, 

X.n-..    11)15 

4, 

M:i:.,    l')16 

5^ 

X.v.,    1916 

('i. 

May,    1017 

7. 

X.V..    1017 

WAR  LOANS  t)F  AUSTKI\-Hl'XGARY 

Rate  of  .       ..„, 

Int.  7c  ■''"'"""• 

AuMna-i,       j;!- 2.U,0(1().0nn 

llunsianan,   6     =;v,,0(t0.1KX! 

Austrian.       .-  _• i24,80n.(KX1 

HuniCinan,  (j     815,0»XVl<)t> 

Au-^tnan.       .- -,^q  00(1.(110 

Ihmganan.  (>^     9()4*tnO.0'IO 

Austrinr,       .•'   .• ,,^,  f^Xtfn) 

Hmif-'anan,   (j     802,000.000 

•\>'?"'''"'-       ■;   - .VO.DOO.OftO 

HmiKanan.   b     081,800.000 

.\u?trian,       ■■>  _■ .^(10.000.00(1 

1  fuimanan.   o     ,  l60,20(M1i'«) 

Austrian,       ^   .■ ^(KUKIO.O!  0 

Hiinsjarip.n.   ''     

_     ,                                              ...   S7.95.'.ooo,oor. 
Tr'tal     


TEUTONIC  ALLIES 

Turkey  has  issued  a  number  of  loans,  both  at  home  and  abr.,a.l. 
\hM  of  the  external  loans  were  placed  in  Germany,  though  a 
Muall  amount  uas  Hoated  in  neutral  countries.     By  a  cunou, 
stroke  of  ironv  a  Turkish  loan  had  been  placed  in  France  shortly 
before  the  outbreak  of  the  war,  part  of  the  proceeds  nt  which 
were  undoubtedlv  used  to  ,neet  war  exi^nditures.     Paper  money 
has  also  been  is^-ted  freely.     But  the  main  source  of  supply  ot 
Turkish   finance,  ha^  been  the  German  government,  which  .. 
reported  to  have  nolified  Turkey  and  lUilgaria  that  ^he  would 
assume  all  exi)enses  incurred  by  those  countries  in  the  campaign 
,„■   r.)i7-lP       The  Turkish  debt  was  stated  toward  the  close 
of  the  ve.r  I'M"  to  amount  to  £T23O,t)O0,(><JO.^  or  $1.012.«)(X.X1I). 
liul-'raria  aiso  I,a<  been  financed  in  large  i^art  by  Germany. 
Some  "internal  lKm>  have  also  lu^en  issued.    The  total  cost  of  the 
war  to  Bulgaria  mav  he  estimated  at  about  S1.2?0.0a\r.0O. 


=  77u-  F.,-u.w,ist  (L..nil.mi,  N..v.  10.  \')\7.  p.  /0« 


CONCLUSION 


It  is  now  possible  to  bring  together  the  final  figures  for  all  the 
belligerent  countries  and  to  estimate  the  total  cost  of  the  war  for 
the  three  years  and  fi\e  months  of  its  continuance,  from  August  1. 
1914,  to  December  31.  1917.  For  purposes  of  comparison  the 
p(3I)uiation,  national  wealth,  and  income  of  the  various  bellig- 
erents are  also  given. 

POPL-LATIOX.  WEALTH,    AND   WAR   EXPENDITLKF.S  > 

(aX)'s  omitted) 

^  Direct 

Nati.inal  National  War 

f,,,,ntrv  Papulation  Wealth  Incme      Expcn.liture. 

I-    .    1    <,..tn.  10'8'6         $2i()(X)fl.<KK»        $.38/miK)0  $6,4,U,(>in 

Rest  of  Bri„sh  En,p,r.  *>  .    2  .^)  J^  6.^^  ^^,, 

Erance ^w»  6(M(y)(W  6,50t>.000  22.000,0<JO 

Uair.'"-               •■••'•'•  ^^  Wmm  4.000,000  6.\WW 

Belgium,     Serbia,     Ru-  1500O.OOO  1.500.0O1  2.5(*\m 

mama    '('•'«)  i>,>)"<.  2^00,000 

Other  Allies* L_ 

Total    Entente    Alii..  7^^  i=;07,740.» *)  $74,723.0(K)  S79.425.OX) 

6S44:>  $8.1250.000        $10,500,000        $25,000,000 

Gftnnnv      61^.44-  ^^VisOOOO  5.50O.0OO  11.144.000 

Tur^'y:'nl;i^:;na.:::;:  27m.      Imm     imm     2,262.000 

Total  Central  Powers  f^^HIT  $142,M0,(W  $17,000,000  $38.406.0(W 
,;„„,,   ,„tai    W2.8W       $650,570,000       $91,72.lOX)      $117.8.^.001 

*The  other  allies  not  enumerated  in  this  table,  which  have  declared  war  or 
Germany  are  Brazil,  China.  Cuba.  Greece.  Japan.  L.ber.a.  Montenegro, 
Panama,  Portugal.  San  Marmo,  and  Siam. 

•  The  statistics  of  population  are  t..Icen  from  articles  by  I^r-jKf  C"'""'"'^'- 
The  Co^t  of  the  War,  in  J.'.nn'  '^''V''^-'?'''''^'''''  .■^'•'•l''^V,^^='V„,  V  a-f  £.  r'^ 

;^c;:onf^':^-s'a?i^!;s^w!:^  ;eS;o.-  ;^i«ures  "^ --™^'^-|:;3 -'^^ 

(Paris,  i914>. 


42  niKFA  r  O'srs  of  the  pkf.sent  war 

The  ri^iires  ^iven  in  this  table  are  so  stuiiendous  that  they 
fail  tM  carrv  a  ilchnite  impression.  If  the  annnal  national  income 
vi  the  more  important  countries  is  compared  with  the  cost  of 
the  war  for  the  last  calendar  >ear,  1017,  the  real  burden  of  the 
war  is  made  more  apparent.  It  will  be  noticed  that  in  some  cases 
the  war  is  already  costins,'  more  in  a  single  year  than  the  esti- 
mated income^  of  the  whole  people,  and  in  all  the  others  except 
the  L'nited  States  it  i-  apj.roachinf;  very  close  to  this  point.  Only 
in  the  ca~e  ..f  thi-  cuntry  do  there  remain  any  appreciable  re- 
-onrces  which  may  yet  be  drawn  upon  to  defray  future  costs, 
'I'hf  following  table  uives  the-e  figures: 

.WNUAL  NATIONAL   !\(,()M1.  AND  WAR  I- XPF.N'I )lTrRES 

\nnu.il  N'ation.il  War  E\pcii<iitures 

Cniintrv  i"a.m,'  tor  1917 

I-nif.-.l    Sfucs  .     WaiK^Umn.fKM)  •J9,,KK KOI  10,000 

l.>.,„,.„  ;„<(XI,<KHI.IP(K)  (j./JO.lXXMTOO 

p^,'",'^     ,o(KMKHMKH»  10,<KX>,000.0<K) 

ulu         4,(KK).(HK),(K)«)  2,S<K),(100.000 

}vn„,,„;: ;  1(),5(KMK)0.(K«)  y,.',*lO,(i()n,000 

A~:H,;n.;,ry- ::::':        3.5<H.,u«.,o.«  -..(mmxm 

"F^timat..!   f-r   li  ni>:nt!is  .n  tlu-   !.aM.  ,,f  9  m..ntli>'  actual   cxi>cn(liturcs, 
.,I1.uv;mioc  I'l-ing  made  t^r  pr..i;rtssivf  mcmtlily  llK■rea^c. 
TExclti-ivc  of  loans  ;o  AU'.e-. 

In  conclusion  it  >hould  be  noted  that  the  costs  thus  far  talni- 
lated  are  only  the  direct  money  outlays  of  the  cnmtvies  involved. 
They  do  not  take  into  account  the  indirect  costs,  -ich  as  the  de- 
struction ..f  propertv.  the  depreciation  of  capital,  the  loss  of  pro- 
duction, ti.e  interru,  ion  to  trade,  etc.  It  has  been  estimated' 
that  the-e  amount  to  as  much  as^ain  as  the  direct  costs.  This 
would  rai-e  the  total  cost  to  all  the  belligerents  to  $335.00O,(XX1.- 
(Mt  And  in  this  sta.-gerin,-  total  are  not  included  the  ex|)endi- 
ture^  or  losses  of  neutral  nations,  which  have  been  very  real  and 
iu  >-iiie  cases  very  serious  nor  the  loss  of  human  life. 

On  the  -ther  hand,  certain  deductions  may  be  made  which 
reduce  s<.nicwhat  the  real  costs.    In  the  fir>t  place,  not  all  of  the 


1  P.v  Cr:mnior!(I.  :,u\  ill.,  p.  .'"H. 


CONCLUSION 


43 


war  expenditure  is  i«irc  loss.     Some  e.xi)en(lilures  :.re  simply 
transfe.-reil  fnnn  family  budgets  to  that  of  the  state.     Soldiers 
are  fed.  clothed,  and  housed  at  the  exi)ense  of  the  government 
and  the  l>ill  is  paid  -ut  of  taxes  or  loans.    Other  expenditures  are 
positively  productive,  such  as  the  building  of  railways  or  mer- 
chant ve'ssels.     .\nd  in  the  second  place  it  is  (piite  obvious  that  a 
partial  explanation  of  the  growing  costs  of  the  war  lies  in  the 
.lei)reciation  of  the  money  unit.     Measured  in  dollars  the  ex- 
l>enditures  are  mounting  steadily  and  rapidly.    Measured  in  terms 
of  services  and  comnxxlities  the  increase  is  much  less  rapid.^^  It 
has  l)ccn  estimated  by  the  editor  of  the  London  Statist'  that  "the 
net  cost  of  the  war  to  the  lielligerents  is  alxnit  one-half  of  its 
total  cost."    If  this  generalization  be  accepted  as  correct  and  one- 
half  of  the  direct  cost  \ye  subtracted  there  is  left  as  the  real 
economic  cost  of  the  war  thus  far  $176,700,000,000. 

But  after  all  deductions  and  allowances  are  made,  the  economic 
cost  remain?  an  appalling  one.  .\nd  even  this  does  not  take  into 
:iccount  the  effects  of  the  war  on  life,  human  vitality,  economic 
uell-Iieing,  ethics,  morality,  or  the  other  phases  of  human  rela- 
tionshiiw  and  activities  which  havelieen  disorganized  and  injured. 

1  I  he  SliiHsl.  Oct.  23,  1915.  p.  181. 


y 


IMHta 


